Taking on Non-Tariff Barriers to Trade

One of the unfortunate byproducts of a more globalized dairy industry is an increased incidence of non-tariff barriers to trade. Even as global dairy demand rises, new sanitary and phytosanitary (SPS) requirements are erecting roadblocks for U.S. dairy suppliers that are, in some cases, more burdensome than tariff barriers.

U.S. suppliers have seen business cut off from Algeria and Russia—two of the biggest dairy importers in the world—due to disagreements over health certifications and, in Russia’s case, approved plant lists and inspections. We have effectively been shut out of India due to non-scientific rules regarding animal feed. And our business in China has been threatened by health certificate attestations.

These instances and dozens of lower profile cases create commercial risk, defeat the best product and marketing plans, and undermine the industry’s and government’s investments in expanding exports.

They may be the result of intentional efforts to restrict imports or may be the inadvertent outcome of nations attempting to regulate their markets and safeguard their populations. Whatever the specific motive in each case, the number of specious SPS measures is mushrooming, and addressing them will require some new tactics.

Although a system does exist to handle disputes on the validity of SPS restrictions, it is insufficient. The World Trade Organization’s SPS agreement provides principles to counter countries that stray from science-based standards that are intended solely to stop imports. As good as the agreement is, it is really just a first step and lacks the specificity necessary to deal with the complexity of SPS measures we are seeing today.

That puts the onus back on the U.S. government and industry to defend the quality and safety of U.S. products. Unfortunately, the U.S. regulatory system— with multiple agencies involved in the food safety and export approval process—was not set up to address the growing barrage of non-tariff barriers with the speed and efficiency required by today’s business world.

If we are to continue on the road to becoming consistent global suppliers, a number of things need to change. For starters, we need an improved, systematic process for coordinated, expedient solutions to SPS issues.

Now I am not criticizing the talented and dedicated government officials struggling to resolve SPS problems. Many of these officials have worked tirelessly with U.S. Dairy Export Council (USDEC) staff over the past 15 years to put an end to such issues.

But the system simply is not designed for quick resolutions. The United States must improve the coordination process of the alphabet soup of agencies—AMS, FAS, APHIS, FDA, USTR, etc.—that are involved in food safety and health trade issues.

Key to improving that process is government and ag sector cooperation to increase the focus on practical solutions to export barriers and to help anticipate problems before barriers become entrenched.

In other words, we need to take a proactive approach.

That’s just what USDEC is doing with its SPS initiative that it began to work on with other agricultural sectors last year. The initiative is part of an ambitious, long-term “regulatory coherence” effort, involving helping the U.S. government become more proactive on SPS issues and reducing inefficiencies associated with “putting out fires.”

As part of that broader effort, the dairy industry and other ag sectors are pressing for a series of actions aimed at reducing non-tariff barriers to trade. Those include:

• Building on principles of the existing WTO SPS agreement with more specific obligations to protect against unjustifiable obstacles to trade.

• Putting science at the core of what we do, requiring a scientific basis for every public health or sanitary protection question.

• Promoting the work and recognition of science-based international standards setting bodies.

• Encouraging countries to allow for trade comments on new rules prior to implementation and provide time for suppliers to adjust to the rules.

• Harmonizing import documentation.

The Trans-Pacific Partnership (TPP) FTA talks provide a special opportunity to pursue many of these bullet points. Today, the roster of countries in the TPP offers little upside from prospective tariff changes (and in fact a large negative impact from the prospective inclusion of U.S.-New Zealand dairy trade). Yet in it, we have a chance to create a template for all future trade agreements and a “gold standard” for other countries to follow for internal SPS practices.

We need to press for greater reliance on scientific analysis, greater stakeholder consultations, harmonized documentation requirements and specific disciplines for timely and rigorous risk assessments.

Minimizing the threat of non-tariff barriers to trade is a continuous, long-term proposition, and efforts to do so need to begin in earnest now.

(This article first appeared in Cheese Market News in March 2011.) 

The U.S. Dairy Export Council represents dairy farmers, proprietary processors, cooperatives, ingredient suppliers and export traders. Its mission is to enhance U.S. competitiveness and increase global sales of U.S. dairy ingredients and products.