GMA urges rejection of 'trade distorting tariffs'

By Anthony Fletcher

- Last updated on GMT

Related tags: International trade, Gma

The Grocery Manufacturers Association (GMA) has called for
substantial reductions in 'trade distorting tariffs and subsidies'
and a rejection of the EU's proposals regarding geographical

Testifying on behalf of GMA during the Senate Agriculture Committee hearing on the World Trade Organization (WTO) agriculture negotiations, Leonard Condon, director of international business relations at Altria Corporate Services, outlined the food and beverage industry's goals for ensuring the future growth of the entire food and agriculture sector through increased trade opportunities.

"We see enormous potential to increase exports of domestically-made products to emerging markets, where annual sales of packaged foods are increasing by as much as 28 percent,"​ said Condon.

"Moreover, because our products serve as an export gateway for domestically-grown bulk commodities, increased trade in processed foods will lead to new opportunities for American farmers as well as food companies."

The GMA has consistently supported trade-liberalizing measures, most recently the Central American Free Trade Agreement (CAFTA) despite reservations from the sugar industry. The association argued that "with the elimination of these onerous tariffs, food companies will be able to increase their exports to the region by as much as 84 percent"​.

However, the GMA claims that export opportunities are limited because of continuing high tariffs imposed on agricultural products. Globally, the average tariff is 62 percent compared to only 4 percent for industrial products. Tariffs on processed foods tend to be even higher because of tariff escalation, which increases tariffs based on the level of processing.

In order to achieve commercially meaningful access for processed food exports, the GMA called on US negotiators to eliminate or significantly expand domestic tariff-rate quotas that restrict access to key commodities that are deemed to be "sensitive" products such as dairy and sugar.

It also wants government to set an ambitious tariff cutting formula that applies to all products and prohibit agricultural export subsidies such as those used by the European Union. Most significantly, it urged leaders to reject the EU's proposals regarding geographical indications that would limit the food industry's use of generic terms like Parmesan and feta.

The EU announced recently that it would oppose any move that would undermine geographical indications. It is currently pursuing the issue at the World Trade Organization (WTO) and at the World Intellectual Property Rights Organization in defense of Italian.

"A 'Parmesan precedent' would be very unfortunate,"​ the EU stated in its analysis of the various issues it faces at this round of Codex negotiations. "It could be used in future to override the interests of other members on issues of particular concern. Breaking the consensus rule on this issue would diminish the standing and authority of Codex in the international community."

The GMA disagrees, and the World Trade Organization (WTO) agriculture negotiations look set to be very tough indeed. One positive thing to note however is the GMA's acceptance that the WTO is the appropriate body within which to debate such topics.

"Clearly, the ongoing WTO negotiations cannot be concluded without an acceptable agreement on agriculture,"​ said Condon. "Given our abundant natural resources, highly efficient agriculture sector and superior marketing capabilities, we are convinced that US farmers and businesses can only gain from new WTO rules that limit government intervention in agricultural production and trade."

Related topics: Regulation

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