CALF_News_October_November_2020

18 CALF News • October | November 2020 • www.calfnews.net Continued on page 22  Evolution in International Trade O ur trading agreements – and subsequent export/ import regulations – with other countries are an ever- evolving beast. Erin Borror, economist with the U.S. Meat Export Federation (USMEF), says a lot of things have changed, even in the last year. “Regarding access to markets, the U.S. is in a much better position than a year ago. Prior to the coronavirus, this should have been a really good year. On the access front, with the Japan-U.S trade agreement and the China Phase 1, this pretty much resolved the major issues we were facing last year,” she says. Mainly it brought us to a level playing field with Japan, and we are also ben- efitting from tariff reductions.“This is crucial, and has been one of the drivers of growth in our beef exports. The Phase 1 with China is a non-typical agreement. It did make some big, structural changes on the beef side, for access into China, and went beyond what I thought would be likely or possible, removing the big- gest barriers,” Borror says. “China has agreed to establish import maximum residue limits for growth- promoting hormones, and to accept our traceability system; there will be no more traceback of the individual animal to the birth farm.” The main remaining barrier is that China still tests for residues of beta agonists, or ractopamine, fed in the final days of the fin- ishing period. There are some other things like product labeling that are required for China, so it’s still a China-specific supply chain and product, but U.S. producers merely have to establish this from the feedlot on, rather than from birth. “Part of the reason we haven’t seen shipments to China explode – even though they are growing dramatically from a small base – is likely the per- ceived risk with U.S. and China’s rela- tions,” Borror says. “For example, China has been waiving the retaliatory tariff on U.S. beef since early March. For part of last year, U.S. beef was subject to a 47 percent import duty compared to the most-favored- nation (MFN) rate of 12 percent. The retaliation was a response to U.S. tariffs on imports from China as a part of the Section 301 actions [addressing U.S. concerns about China’s treatment of intellectual property and other issues].” Since early March, importers of U.S. beef have been paying the 12 percent MFN rate, making our product much more competitive, especially as Australia, our primary competitor, has significantly reduced production, with accordingly higher prices. “So the combination of the Phase 1 breakthroughs on market access barriers and China’s tariff exemptions have trig- gered growth in U.S. exports to China,” Borror explains. First-half volume was up 80 percent to 6,912 megatonnes, valued at $54 million.“But the U.S. still accounts for just 1 percent of China’s massive beef imports,” she says. There was also a new agreement with the European Union (EU) to carve out a U.S.-specific share of the high-quality beef quota created out of the United States and EU memorandum of under- standing on the hormone case, won by the United States through the World Trade Organization (WTO). The EU has refused to change its practices and, instead, has opened a duty-free quota for non-hormone-treated beef meeting the high-quality definition (grain-finished). “To meet WTO rules, the quota had to be open to all suppliers meet- ing the definition, and soon the quota was fully utilized by the competition, including beef from Uruguay, Australia, and Argentina,” Borror says.“The U.S. successfully negotiated an agreement last year to give us a U.S.-specific share of that quota, and that agreement started Jan. 1, 2020. “We had a banner first quarter and then the coronavirus shut down Euro- pean food service. It was a rough second quarter but, toward the end of it and into this third quarter, it started to regain trac- tion, with an encouraging outlook.” . The agreement – implemented over seven years – allows for 35,000 tons of the 45,000-ton total. According to Borror, we have 18,500 metric tons (of By Heather Smith Thomas, Contributing Editor U.S. beef arrives at a cold storage warehouse near Tokyo, Japan.