THE TTALK QUOTES 

On Global Trade & Investment

 

Published Three Times a Week By

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No. 10 of 2015 

TUESDAY, FEBRUARY 3, 2015      

 

   

Filed from Portland, Oregon  

     

Click here for last Monday's quote on the rise of the Swiss franc.
ABOUT OUR CHICKENS

"They [the chickens] outnumber us 300 to 1 in Delaware, and we want to make sure that we can sell them to as many markets as possible."

SEN. TOM CARPER
January 27, 2015

CONTEXT
Senator Thomas Richard "Tom" Carper, a Democrat, is the dean of Delaware's Congressional Delegation and a member of the Senate Finance Committee.  Last Tuesday, January 27, the Committee held a hearing on President Obama's trade agenda.  The witness was U.S. Trade Representative Michael Froman, and when the time came for Senator Carper to question the Trade Representative, he put a lot of emphasis on U.S. poultry exports, in a word, chickens.  Here is more from the passage in which he pressed that issue:

"The reason why Senator Isakson [Republican of Georgia], yours truly [Senator Carper], Senator Cardin [Democrat of Maryland], [Senator] Mark Warner [Democrat of Virginia], continue to focus on poultry [is] it's a huge industry on the Delmarva Peninsula.  ...

"We only have three countries in Delaware. ... Sussex is the third largest country in America.  We raise more soybean there than any county in America.  We use the soybean and the corn that we raise on the Delmarva Peninsula to raise all of those chickens.  They outnumber us 300 to 1 in Delaware, and we want to make sure that we can sell them to as many markets as possible."

Poultry is indeed big business.   Exports of U.S. broiler or chicken meat in 2013 were valued at roughly $4.3 billion.   And not surprisingly the National Chicken Council (NCC) is a pro-trade (or at least a pro-TPA) organization.  In a January 26 press release, NCC's president, Mike Brown, explained that "with 20 percent of our production being exported to more than 100 countries, outside-the-[U.S.]-border customers are becoming more and more important, especially for our dark meat products."  So, the NCC is urging Congress to pass Trade Promotion Authority, primarily in the hope that it will lead to an approved deal in the Trans-Pacific Partnership negotiations.


And yet there are problems:

 

Russia is blocking U.S. exports largely for geopolitical reasons.


South Africa imposes anti-dumping duties on certain poultry imports from the United States.


India has blocked various poultry exports from the U.S. for several years now over concerns about avian flu.  The U.S. took the matter to the WTO and won, at least at the first stage, but the case is not over yet.  On January 26, India formally appealed the initial decision.


The European Union.  Here the problem for U.S. producers is the familiar one of process regulations.  Senator Isakson of Georgia explained the issue:


"On the one hand, the Europeans will talk about giving market access - for example, to poultry - but on the other hand, they'll say, 'But, we [in Europe] won't take any poultry that's washed with hyperchlorinated water.'  Well, that's the way it's produced in the United States of America, whether Delaware or Georgia or Texas or California.  They use the regulation to be the barrier, not the product."


Canada has its supply management system for milk, cheese, eggs, and poultry, a system that all of the U.S. producers of those products would like to see changed.


And as if all of this were not enough, China and several other countries have recently banned U.S. poultry, following the discovery of avian flu last December in Oregon and Washington.  Those were backyard birds.  No cases have been found in U.S. commercial poultry. 


COMMENT
We have to start by thanking Senator Hatch and Representative Ryan, the chairmen respectively of the Senate Finance Committee and the House Committee on Ways and Means.  The trade policy hearings they held on January 27 are gold mines for those who care about trade, and we expect to highlight some of that treasure in several more entries.

With respect to the issue at hand, we thank Senator Carper, a former governor and a former Navy officer, for enriching our appreciation of the Delmarva Peninsula, which includes portions of Delaware, Maryland, and Virginia. 

As for the trade barriers to U.S. poultry, it is striking how varied they are.  In the case of South Africa's antidumping duties, America's principal lever seems to be the African Growth and Opportunity Act.  The hope is that, as the U.S. works toward renewing that system of preferences, South Africa can be persuaded to lift its restrictions.

With Canada, America's hope for change lies in TPP.  From our perspective, however, the real issue has less to do with leverage and more to do with how Canada sees its future.  Ironically, if the U.S. gets what it seeks vis-à-vis Canada's supply management system - and we hope it does - the result could be more than just new U.S. export opportunities to the north.  In the years ahead, it could also mean strong new Canadian competitors for U.S. export markets.

The European case is perhaps the most telling.  There the hope for changes is pinned to the Transatlantic Trade and Investment Partnership, the T-TIP negotiations. The dispute over trade in poultry is the test case for the question: Can the U.S. and Europe move the needle on regulatory cooperation?  We're sure the negotiators would like to, but the politics are tricky.
SOURCES & LINKS

A Finance Committee Hearing takes you to the page of the Senate Finance Committee with a link to the video recording of this event.  That recording was the source for today's quote.


WorldPoultryNews is the source of the data on chicken exports.


From the National Chicken Council is a link to the Council's January 26 press release urging approval of Trade Promotion Authority.


India Appeals  is a WTO statement on this latest development on the U.S.-India poultry dispute at the WTO. 


Canada's Supply Management System is the Wikipedia entry on this policy.


Disease in the Back Yard is an article from Food Safety News on the trade consequences that have followed from the discovery of avian bird flu in chickens in Washington and Oregon.


About the Map.  The picture above is from Wikimedia Commons.  The author of the photo is Olivier Hamman.

 

Maryland's portion of the Delmarva is the orange, that is, the northwest segment.  The yellow in the northeast is Delaware, and the lower third of that is Sussex County. Virginia is represented by the yellow section at the bottom.


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