The Use of Technical Barriers to Trade in Response to Increased Competition in North American Agriculture Prepared for the Organized Symposium: North American Free Trade and Responses to Increased Competition: A Look at Trade Disputes and Technical Barriers to Trade AAEA Annual Meetings
Montreal, Canada
July 28, 2003
Parr Rosson and Flynn Adcock
Texas A&M University
The Use of Technical Barriers to Trade in Response to Increased Competition in North American Agriculture Prepared for the Organized Symposium: North American Free Trade and Responses to Increased Competition: A Look at Trade Disputes and Technical Barriers to Trade AAEA Annual Meetings
Montreal, Canada
July 28, 2003
Parr Rosson and Flynn Adcock
Texas A&M University
Overview
Types of Technical Barriers to Trade
Increased Competition Created by NAFTA Trade
Uses of TBTs in Response to Increased Competition
Technical Barriers to Trade
WTO Definition: Technical Regulations are documents which lay down product characteristics or their related processes and production methods with which compliance is mandatory
Includes administrative provisions
Includes terminology, symbols, packaging, marking or labeling requirements
NAFTA SPS Agreement Designed to Prevent Use of SPS Measures as Disguised Restrictions to Trade
SPS Measures Must be Based on Scientific Principles and Include a Risk Assessment
Measures Cannot Restrict Trade Beyond a Country’s Chosen Level of Protection
Does Not Allow Unfair Discrimination
Does Allow Protection of Human, Animal or Plant Life and Health
Increased Competition Created by NAFTA
Agricultural Trade among NAFTA has More than Doubled since 1989
U.S. NAFTA Exports Grew from $5.0 Billion to $16.0 Billion
U.S. NAFTA Imports Grew from $5.2 Billion to $15.8 Billion
Increased Trade in Grains, Animal Products, Fruits, and Vegetables
Technical Barriers to Trade
Labeling
SPS Measures
Food Safety Standards
Licensing Regimes
AD/CVD Cases – Not Discussed Here
TBTs and Grain Trade
U.S. Sorghum Exports to Mexico Average 3.4 MMT per Year Since 1989
In 1996, Mexico Slowed Issuance of Sorghum Import Permits
Lowest U.S. Sorghum Exports for the Period Resulted - 1.97 MMT
Issue Resolved and Exports Reached Highest Level Ever in 2001 – 5.01 MMT
TBTs and Grain Trade
U.S. Corn Exports to Mexico Averaged 3.7 MMT since 1989, 4.6 MMT since NAFTA
Mexican Corn TRQ Allows for Slightly More than 3 MMT – U.S. Exports Almost Double Since 1996
Distribution of Quota Via Cupos Politically Sensitive, but No New TBTs Recently
Mexico Delayed Release of Rail Cars Containing U.S. Paddy Rice for a Month During Late 1998
TBTs and Fruit and Vegetable Trade
U.S. Exports of Apples, Grapes, and Peaches to Mexico Growing Since 1995
Apples: In 1998, Mexico Filed Labor Non-Compliance Complaint and Washington State Apple Shippers Balked at Mexican Inspection Process
U.S. Apple Exports Stopped During October 1998, But Have Grown Since
Grapes: Mexico Began Requiring COOL in Spanish in 1997 – Industries Working Together
Peaches: One Oriental Fruit Moth Caused Declines in U.S. Peach Exports from 1998-99
TBTs and Fruit and Vegetable Trade
Long Standing Phytosanitary Issues Regarding U.S. Avocado Imports from Mexico
Mexico Gained Partial U.S. Market Access in 1997 – Now Negotiating for Longer Time Period and More States – CA not Supportive
FDA Banned Imports of Mexican Cantaloupes in October 2002 Until Certification of Sanitary Production Conditions
Several Mexican Producers Have Met the New Requirement
Other NAFTA TBT Issues
Timing of Mexican Import Permit Auctions for Dry Beans Has Slowed U.S. Exports Since 1999
Phytosanitary Issues & Under Invoicing by Exporters Noted As Problems by Mexico
Canadian Issues Regarding Pseudorabies in Slaughter Swine from Certain U.S. States – Corrective Regulations Considered Overly Burdensome
Avian Influenza (1999) and Exotic Newcastle Disease (2003) Affecting U.S. Poultry Meat Exports to Mexico
Recent BSE Situation with Canadian Cattle
Country of Origin Labeling States that Certain Fresh/Frozen Fruits, Vegetables, Meats, and Seafood Sold at Retail Level Must be Labeled by Country of Origin
Supporters Say “Consumers have a right to know” and that COOL Will Assist in Addressing Food-borne Illness Outbreaks
Opponents Think it is Too Costly and that it is Nothing but a Protectionist Measure
COOL Implementation May Lead to WTO Compliant
Complete Implementation not Assured
Summary and Conclusions
Increased North American Agricultural Trade Has Led to Increased Competition
TBT’s Have Been One Way Countries Attempt to Protect Industries from Competitive Pressures
While Important to Maintain Animal and Plant Health, SPS Measures Can be Used as TBT
Licenses and Other Administrative Measures Also Increase Cost and Reduce Pace of Trade
Summary and Conclusions
Border Procedures Such as Inspection Practices and Timeliness of Administrative Processes Can Negatively Impact Trade Flows
Country-of-Origin and Other Labeling (Nutrition, GMO) Can be Used as a Trade Barrier
As Tariffs Continue to Decline, Use of Non-Tariff Barriers, Including TBTs, Will Likely Increase
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