International Trade Policy & SPS

Laurie A. Hueneke

World Pork Expo Des Moines, IA June 7, 2012

0

150,000

300,000

450,000

600,000

750,000

900,000

1,050,000

1,200,000

1,350,000

1,500,000

1,650,000

1,800,000

1,950,000

2,100,000

2,250,000

Me

tric

To

ns

Year

U.S. Pork ExportsCanada FTA

NAFTA

(Mexico)

WTO Uruguay Round

(Japan & South Korea)

U.S. -Taiwan

Pork Deal

China

WTO Accession

Russia Pork

TRQs

Australia

FTA

DR-CAFTA

U.S. - Korea

U.S. - Colombia

Free Trade Agreements (FTAs)

Free Trade Agreements

Why are these three FTAs important to U.S. pork producers?

• Increase U.S. pork exports by more than $770 million annually

• Add more than $11 to U.S. live hog prices

• Generate more than 10,200 pork industry jobs

Trans-Pacific Partnership (TPP)

• NPPC 1st in private sector to support

• Address tariff, but real payout for U.S. pork is resolving sanitary (SPS) issues

– Trichinae risk mitigation requirements • Freezing, testing carcass, processing

– PRRSv and PCv • Removal of bone, cooking, freezing

– Residue level differences for vet drugs

• Just finished the 10th Round of negotiations in Australia (March 2012)

• Next Round in May – Dallas, TX

TPP

Japan & TPP

U.S.-European Union FTA

U.S.-EU FTA

• U.S.-EU Working Group considering options to increase trade through a reduction of barriers – a possible FTA

• EU has PTAs, not FTAs – Must include agriculture

• NPPC led coalition letter with 49 ag orgs and businesses

• NPPC filed comments on EU pork barriers

– TRQ smaller than Uruguay Round minimum access

– Ractopamine

– Trichinae testing

– Pathogen reduction treatment prohibition

– Plant approvals

Russia’s WTO Accession

Russia Political Situation

• Presidential election was on March 4, 2012

• Vladimir Putin returns as president

• Putin now faces a new political and economic environment.

Meat Exports to Russia

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

Met

ric

To

ns

Year

U.S. Meat Exports to Russia, 2005-2011 (Quantity)

Pork

Beef

Poultry

Russia--SPS

• Freezing requirements for trichinae, do not allow fresh/chilled

• Zero tolerance for pathogens

• Zero tolerance for tetracyclines

• Do not recognize systems-based inspection & certification/equivalence

• Threatening ban on use of ractopamine

Russia

Why is Russia’s WTO accession important to U.S. pork producers?

• Without SPS commitments from Russia the beneficial TRQs mean very little. NPPC trying to get a bilateral SPS deal.

• In 2008, prior to Russia’s actions, U.S. pork exports reached a record level of over 200,000 MT. Since then exports have fallen by 60%.

• Dr. Hayes of Iowa State forecasts U.S. pork exports to be at least $400 million per year the next few years -- IF Russia stops using illegitimate SPS measures to limit U.S. pork

China

• Domestic pork consumption 50 million (MT)

• Estimated that the market for U.S. pork in China could be well over 1,000,000 MT.

• U.S. pork imports are constrained by: • Ban on the use of ractopamine in imported pork

• Discriminatory value added tax (VAT)

• Large subsidies to domestic producers

• Other restrictive practices

• U.S. pork imports through the roof in 2011. • China: $713 million

• China/HK: $909 million

China

Comparison of Production

China

$113

USA

$63

Dollars per Hundredweight

Feed cost in China: $61

China

-2.5

-2

-1.5

-1

-0.5

0

0.5

1

1.5

Per

cen

t

Year

Net Chinese Pork Imports as a Percent of

Chinese Pork Consumption

Why important to U.S. pork producers?

Impact of Additional Chinese Imports of U.S. Pork on the US Economy

Additional Imports as a Percent of Chinese Consumption

Economic Indicators One Quarter

Percent

One Half

Percent One Percent Five Percent

US Pork Export Value

(Thousands Dollars) 267,173 534,346 1,068,693 5,343,463

US Pork Export Volume

(Thousand Metric Tons - CWE) 125.13 250.25 500.50 2,502.50

Total U.S. Jobs Created 6,849 13,698 27,396 136,981

Direct U.S. Pork Industry

Jobs Created 3,393 6,786 13,572 67,862

Share of U.S. Production

(Percent) 1.24 2.49 4.98 24.90

Impact on U.S. Live Hog Prices

($/Head) 3.72 7.44 14.88 74.39

Thank you!