Confronting Technical Barriers to Trade: Achieving NEI through Regulatory Coherence that Strengthens Rules on SPS Measures

Agricultural Outlook Forum Presented: February 24-25, 2011 U.S. Department of Agriculture Confronting Technical Barriers to Trade: Achieving NEI through Regulatory Coherence that Strengthens Rules on SPS Measures Thomas M. Suber

Confronting Technical Barriers to Trade Achieving NEI through Regulatory Coherence that strengthens rules on SPS measures Agricultural Outlook Forum February 24, 2011 Managed by Dairy Management Inc.

U.S. Dairy Export Council.working world-wide to promote U.S. dairy exports 2

Outline Importance of trade to U.S. dairy and agriculture Injury caused by unjustified SPS measures Ways to address SPS barriers Using the TPP talks to strengthen rules 3

SPS Barriers Hinder Exports and NEI Goals. but it would be worse without the WTO SPS Agreement Only existing tool to deal with SPS issues Anchors SPS issues in WTO for dispute resolution Focuses SPS on scientific evidence and risk assessment More a set of principles rather than specific rules WTO building, Geneva, Switzerland

U.S. Dairy Exports On Long-Term Growth Trend 4.5 $ in Billions 4 3.5 3 2.5 2 1.5 1 0.5 0 3.8 3.7 2.9 3.2 2.8 2.7 2.5 3.0 2.6 2.2 2.0 1.8 1.8 1.7 2.3 1.5 1.6 1.3 1.9 1.2 1.1 1.7 1.5 1.1 0.9 0.9 1.0 1.0 1.0 1.0 0.8 0.7 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Dairy Product Imports Dairy Product Exports 5

Reliance on Exports Is Transforming Industry 14.0% U.S. DAIRY TRADE BALANCE, 1996-2010 12.8% Total Milk Solids, % of U.S. Production 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% Exports Imports 4.5% 4.4% 3.7% 2.7% 2.9% 3.6% 11.0% 9.3% 9.8% 8.3% 9.3% 7.6% 5.0% 5.2% 5.5% 5.7% 5.1% 3.9% 4.0% 4.2% 4.2% 4.4% 4.5% 4.6% 4.4% 4.5% 4.0% 3.4% 2.9% 0.0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 6

U.S. Agricultural Trade (1995-2010) 120 114.8 115.8 100 90.0 98.5 $ in Billions 80 60 40 20 56.2 30.4 60.4 33.8 57.1 51.8 51.3 53.7 53.1 48.4 36.4 37.1 37.9 39.2 39.5 42.0 59.4 61.4 63.2 59.5 54.2 47.5 70.9 65.5 72.1 80.7 71.8 82.0 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 All Agriculture Imports All Agriculture Exports

Increased Incidence of SPS Barriers. protectionism is one of the key drivers As tariffs decline, SPS barriers rise Industries threatened by imports are creative in ways to keep out competition More stringent health and safety standards -- driven by technology and consumer concerns -- add requirements for imports

Meeting NEI Goal Requires New Rules: Regulatory Coherence Priority: U.S. regulatory agencies must see exports as part of their mission Coherence: Better coordination across agencies APHIS, FSIS, FDA, AMS, FAS, USTR, EPA, OMB/OIRA and State Aggressive: Proactive responses need to replace wait-and-see reaction to other countries trade barriers Timely Action: Quick responses to problems before new barriers are entrenched

SPS Barriers Come in Many Forms Measures not based on scientific evidence or process Arbitrary risk assessments not using rigorous standards International standards not taken into account Non-science considerations

SPS Barriers Come in Many Forms Measures not based on scientific evidence or process Measures are imposed without taking into account interests of exporters Requirements imposed without notice Needs of the trade not taken into account No explanation of reasons for adjustments

SPS Barriers Come in Many Forms Measures not based on scientific evidence or process Measures are imposed without taking into account interests of exporters Discrimination against U.S. product to favor other suppliers Other governments work more expediently with importing country to provide assurances or certifications U.S. system so transparent, and detection technology so precise, U.S. product may appear worse than competitors

SPS Barriers Come in Many Forms Measures not based on scientific evidence or process Measures are imposed without taking into account interests of exporters Discrimination against U.S. product to favor other suppliers Documentation issues Lack of standardization across countries Some countries ask for unjustified data requirements

Elements of an Improved Global System WTO SPS agreement is a good start, but needs to be amplified

Elements of an Improved Global System WTO SPS agreement is a good start, but needs to be amplified Proactive engagement from U.S. government

Elements of an Improved Global System WTO SPS agreement is a good start, but needs to be amplified Proactive engagement from U.S. government Reaffirm science as the core

Elements of an Improved Global System WTO SPS agreement is a good start, but needs to be amplified Proactive engagement from U.S. government Reaffirm science as the core Increase the role of science-based international standards organizations

Elements of an Improved Global System WTO SPS agreement is a good start, but needs to be amplified Proactive engagement from U.S. government Reaffirm science as the core Increase the role of international standards organization New rules need to reflect comments of stakeholders and implemented only after industry has a time to adjust

Elements of an Improved Global System WTO SPS agreement is a good start, but needs to be amplified Proactive engagement from U.S. government Reaffirm science as the core Increase the role of international standards organizations New rules need to reflect comments of stakeholders and implemented only after industry has time to adjust Harmonization of import documentation

Trans-Pacific Partnership Countries Trans Pacific Partnership Countries

Conclusion Regulatory Coherence will require all parties to adjust Dependence on global markets and trade will remain Continued proliferation likely of unjustified SPS barriers Achieving NEI requires adjusting SPS rules to 21 st century trade conditions 21

Thank You Thomas M. Suber, President tsuber@usdec.org 22