Whacking Non-tariff Trade Barriers
China asks for a new health certificate; India abruptly changes import permit requirements; the European Union makes U.S. exporters jump through fresh hoops.
China asks for a new health certificate; India abruptly changes import permit requirements; the European Union makes U.S. exporters jump through fresh hoops.
Dealing with non-tariff trade barriers is like playing Whac-A-Mole. We resolve one issue, another one pops up. The result is increased risk, higher costs and less reliability of supply for everyone in the supply chain.
If it seems like sanitary and phytosanitary (SPS) issues are increasing, it’s not your imagination. Last year, U.S. government agencies reviewed 782 complaints of potential discrimination against U.S. food and farm products, about three times as many as they handled in 2000, according to the Office of the U.S. Trade Representative (USTR).
The World Trade Organization’s SPS Agreement is clear - it allows countries to set their own food-safety and animal- and plant-health standards, but requires that such regulations be non-discriminatory and based on science.
Still, the rules aren’t always followed. The WTO itself concedes that governments are sometimes pressured to use SPS measures to shield domestic producers from economic competition.
“Such pressure is likely to increase as other trade barriers are reduced as a result of the Uruguay Round agreements,” WTO says on its website. “An SPS measure that is not actually required for health reasons can be a very effective protectionist device and, because of its technical complexity, a particularly deceptive and difficult barrier to challenge.”
There are a couple things we must begin to do to better address this growing problem. First, improve the coordination between areas of the U.S. government focused on trade matters. The SPS and other non-tariff barriers we currently face, particularly as they relate to foreign import certification requirements, simply cannot be resolved without close and timely work between the United States Trade Representative, the U.S. Department of Agriculture’s Foreign Agricultural Service, Agricultural Marketing Service and Animal & Plant Health Inspection Service, and the U.S. Food and Drug Administration. Sometimes the interaction has worked well to the benefit of the U.S. dairy industry, but there have been instances when we’ve missed an opportunity to bring the full resources of the U.S. government to bear.
Second, explore how to make use of new trade negotiations to improve upon the functioning of the existing SPS Agreement to make it more effective in practice. The SPS Agreement is a gold-standard pact, but it was developed and implemented 20 years ago. Trade has significantly changed since the early 1990s. Many countries do not understand their obligations under this agreement, and some do not follow the correct procedures before imposing a new health certificate or new requirement. Then, the U.S. government and industry are forced to react to non-tariff barriers as they appear. Finding ways to supplement the SPS Agreement would provide the U.S. government with the tools to proactively find solutions before problems arise.
A good opening is at hand in the form of the Transpacific Partnership. As the U.S. government moves ahead with these negotiations, we have an opportunity to close some of the procedural gaps that hinder trade, while still permitting a rational evaluation and response system.
For instance, we visualize that both future and former trade agreements could include protocols harmonizing certain import requirements (health certificates), set clear rules (risk assessments) and provide transparent actions to resolve SPS matters. Done right, we could avoid unscientific regulations where international guidelines are clearly established, and tighten procedures for how a country could change an SPS requirement, ensuring they demonstrate more concretely the need for deviation.
To be clear, this type of approach is a long-term project and it wouldn’t resolve existing problems we have with India, China, the EU and others. Those will still require arduous negotiations involving multiple federal agencies. But it would serve as a template, with the goal of heading off SPS problems in the years ahead.
Resolving SPS and other non-tariff barriers that hinder U.S. dairy exports has become one of the most frustrating headaches for exporters. In an increasingly competitive global economy, we have to ensure that U.S. products aren’t unfairly shut out of overseas markets they work so hard to attain.
China asks for a new health certificate; India abruptly changes import permit requirements; the European Union makes U.S. exporters jump through fresh hoops.
Dealing with non-tariff trade barriers is like playing Whac-A-Mole. We resolve one issue, another one pops up. The result is increased risk, higher costs and less reliability of supply for everyone in the supply chain.
If it seems like sanitary and phytosanitary (SPS) issues are increasing, it’s not your imagination. Last year, U.S. government agencies reviewed 782 complaints of potential discrimination against U.S. food and farm products, about three times as many as they handled in 2000, according to the Office of the U.S. Trade Representative (USTR).
The World Trade Organization’s SPS Agreement is clear - it allows countries to set their own food-safety and animal- and plant-health standards, but requires that such regulations be non-discriminatory and based on science.
Still, the rules aren’t always followed. The WTO itself concedes that governments are sometimes pressured to use SPS measures to shield domestic producers from economic competition.
“Such pressure is likely to increase as other trade barriers are reduced as a result of the Uruguay Round agreements,” WTO says on its website. “An SPS measure that is not actually required for health reasons can be a very effective protectionist device and, because of its technical complexity, a particularly deceptive and difficult barrier to challenge.”
There are a couple things we must begin to do to better address this growing problem. First, improve the coordination between areas of the U.S. government focused on trade matters. The SPS and other non-tariff barriers we currently face, particularly as they relate to foreign import certification requirements, simply cannot be resolved without close and timely work between the United States Trade Representative, the U.S. Department of Agriculture’s Foreign Agricultural Service, Agricultural Marketing Service and Animal & Plant Health Inspection Service, and the U.S. Food and Drug Administration. Sometimes the interaction has worked well to the benefit of the U.S. dairy industry, but there have been instances when we’ve missed an opportunity to bring the full resources of the U.S. government to bear.
Second, explore how to make use of new trade negotiations to improve upon the functioning of the existing SPS Agreement to make it more effective in practice. The SPS Agreement is a gold-standard pact, but it was developed and implemented 20 years ago. Trade has significantly changed since the early 1990s. Many countries do not understand their obligations under this agreement, and some do not follow the correct procedures before imposing a new health certificate or new requirement. Then, the U.S. government and industry are forced to react to non-tariff barriers as they appear. Finding ways to supplement the SPS Agreement would provide the U.S. government with the tools to proactively find solutions before problems arise.
A good opening is at hand in the form of the Transpacific Partnership. As the U.S. government moves ahead with these negotiations, we have an opportunity to close some of the procedural gaps that hinder trade, while still permitting a rational evaluation and response system.
For instance, we visualize that both future and former trade agreements could include protocols harmonizing certain import requirements (health certificates), set clear rules (risk assessments) and provide transparent actions to resolve SPS matters. Done right, we could avoid unscientific regulations where international guidelines are clearly established, and tighten procedures for how a country could change an SPS requirement, ensuring they demonstrate more concretely the need for deviation.
To be clear, this type of approach is a long-term project and it wouldn’t resolve existing problems we have with India, China, the EU and others. Those will still require arduous negotiations involving multiple federal agencies. But it would serve as a template, with the goal of heading off SPS problems in the years ahead.
Resolving SPS and other non-tariff barriers that hinder U.S. dairy exports has become one of the most frustrating headaches for exporters. In an increasingly competitive global economy, we have to ensure that U.S. products aren’t unfairly shut out of overseas markets they work so hard to attain.
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