WASHINGTON, Feb. 12, 2014 - One of the European Union’s top billed issues in trade negotiations is the question of “geographical indications,” many in the dairy industry tell Agri-Pulse. The term refers to product names derived from their places of origin, like parmesan, feta, and fontina – and could have deep implications for how you eat your pizza.
It’s time, the dairy industry says, to take geographical indications, or GI’s, seriously.
For the EU, preventing American and other foreign companies from using now-standard cheese names in their products could be a fantastic market opportunity. “Provolone”, for example, a cheese EU negotiators have targeted, is named after a region in southern Italy where it was first produced in the 19th Century.
And if only Italy were allowed to use “provolone,” busy U.S. shoppers accustomed to quickly picking up their favorite cheese could find themselves spending more for the imported variety. American-made provolone, meanwhile, would have to be marketed under a different name.
“The worst-case scenario is a situation in which you will not be able to find any camembert, Munster, Havarti (or) mozzarella” in the grocery store, said Jaime Castaneda, senior vice president of strategic initiatives and trade policy at the National Milk Producers Federation. “Any names you’re familiar with in the store are the ones that are produced in Europe.”
And U.S. dairy companies – accustomed to marketing their cheeses all over the world – would have to change the names of products sold abroad as well.
“The cost and limitation of [remarketing] those products will be tremendous,” Castaneda said. “The losses (would be) in the billions of dollars.”
Over $4 billion, to be more precise, according to the U.S. Dairy Export Council. The group says the top cheeses that could be affected by the EU reclaiming common cheese names represent about 14 percent of U.S. production.
Unfortunately, according to dairy and trade experts, the GI issue is among the most important for the EU in Transatlantic Trade and Investment Partnership (TTIP) negotiations with the U.S.
And if a recent free trade agreement between Canada and the EU is any indication, the European body has an aggressive strategy on the issue.
“The EU waited until the very last minute (to resolve GI’s),” Castaneda said. “They’re prepared to give lots of last minute concessions in return for GI’s.”
Canada’s agreement with the EU, which has yet to be formally released, is said to allow the country’s cheese industry to continue to use names like “feta”, “gruyere”, and “gorgonzola”. But new entrants to the market will have to add “-style” or “-like” to products that are not produced in their “country of origin.” “Feta”, then, becomes “feta-style” – a change that could prove confusing to customers.
U.S. companies entering the Canadian market will also be expected to follow the rules set by the Canadian agreement.
A 2010 free trade agreement between the EU and Korea also unsettled industry advocates in the U.S. The agreement barred the sale of products labeled “taleggio”, “asiago”, “feta”, “fontina”, “gorgonzola” and “grana padano” and others, if the foods did not originate in the regions after which they were named.
“We’re worried about [TTIP negotiations],” said Clay Hough, who handles trade affairs at the International Dairy Foods Association. “In any major conflict, it’s usually the side that puts more resources in that wins. And [the EU is putting] massive amount of resources in this effort.”
The relatively good news, for some industry observers, is that TTIP will take years to resolve. It’s a trillion dollar negotiation, with many moving parts – not counting the difficult and uphill battle trade matters are facing in U.S. politics. Trade experts say it will be difficult to pull off any sort of trade agreement without giving the president so-called trade promotion authority (TPA). TPA, or fast track negotiating authority, which allows the president to finalize agreements with an up or down vote from Congress. Under TPA, Congress may not amend or filibuster agreements – making foreign governments much more likely to finalize negotiations, given the tricky and polarized state of the U.S. Congress.
The president’s fast track authority, granted by a 2002 law, expired in 2007. Though a bipartisan group of lawmakers proposed TPA legislation last month, it faced pushback from both sides of the aisle. Most notably, Senate Majority Leader Harry Reid, D-Nev., theoretically President Obama’s right-hand man, told reporters he was “against fast track,” and refused to promise the bill floor time.
“If you talk to anybody, this is going to be a multiyear process,” said Hough.
Still, it’s time for dairy to begin ringing the alarm bells, many in the industry say.
“I do think it is time for this industry to play close attention to trade negotiations,” said Craig Thorn, who worked with USDA’s Foreign Agricultural Service (FAS) and with the Office of the U.S. Trade Representative on a number of trade deals. “Not only do I think the current trade agenda is being seriously followed by the administration after a long lag – I think [trade has] serious implications for this industry.”
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For more information, see www.agri-pulse.com.