Private industry must reassure international partners to help preserve trade

By Elizabeth Crawford contact

- Last updated on GMT

Private industry must reassure international partners to help preserve trade
Food and beverage manufacturers and suppliers must actively reassure their partners abroad that they are reliable even as the US pulls out of key international trade arrangements and negotiations around the North American Free Trade Agreement hit the rocks, according to the former Chief Agriculture Negotiator for the US Trade Representative.

“The sea change we have in the US international trade agenda over the last year, year-and-a-half or so, even through the campaign … has real implications for trade in food and agriculture products in part because many of our trade partners are doing exactly the opposite,”​ Ambassador Darci Vetter, who currently is general manager of public affairs and vice chair of agriculture, food and trade at Edelman, said at the Organic Trade Association’s Policy Conference in Washington, DC, late last month.

She explained that the US has “gone from being outward facing, focused on growing our stable of trading partners”​ to “really looking inward with a trade policy right now that is focused primarily on retreading old ground. We are renegotiating the relationships with our NAFTA partners, we have reexamined the Korea trade agreement and we pulled out of the opportunity to be part of the Trans Pacific Partnership Trade agreement.”

The fallout from broken trade agreements

Each of these “has real implications for the competitiveness of our products,”​ she added.

For example, former TPP partners Australia and Japan signed a deal three years ago that resulted in US beef heading to Japan facing a 12% higher tariff than from Australia. In addition, TPP had an annex that created incentives for member countries to recognize the others’ organic programs, creating a preferred destination for organic products in the TPP, which now excludes the US.

“We now have a disadvantage in foreign markets,”​ which “frankly makes it more important than ever that the private sector provides some leadership and some vision”​ as to how international trade will move forward, Vetter said.

Now is a ‘great time’ for private industry to take charge

Recognizing that the public’s trust in the private sector was shaken in recent years, Vetter noted that trust slowly is being restored – meaning consumers are more receptive to messages from companies.

Citing figures from Edelman’s annual trust barometer study, which evaluates the general public’s level of trust and confidence in institutions, Vetter said the public’s trust in the government is down 30% while their confidence in business leaders and CEOs is up 7%. In addition, she said, around 65% of respondents said they want businesses to take a policy perspective on issues and not wait for the government to act.

“That makes this a great time for your companies to be speaking very clearly about their commitment to being global citizens. It is a time for you to be reassuring your partners in other countries that you are willing to invest in long-term relationships and that you see yourselves as you see them, which is as reliable partners,”​ she said.

She added: “What has previously been unspoken about the US business culture being global and that we honor our contracts and that we will operate transparently is not something you can take for granted now. Rather, now is a time for us to communicate that as an industry.”

Foreign organic is real organic

US food and beverage companies in the organic segment also need to reassure international partners by squashing emerging ideas that foreign imports are not “real organic,”​ Vetter said.

Following the discovery that some imported corn and soy from Eastern Europe was fraudulently labeled as organic, Vetter explained that she has “heard some disturbing rhetoric about fraud in the supply chain and a lack of integrity in the supply chain … as an argument for simply keeping out foreign products”​ labeled as organic.

This attitude not only could harm international relationships, it could damage the commercial viability of organic more broadly, she cautioned.

“There are frankly a lot of alternatives to an organic label that many consumers don’t know how to distinguish between and so if we are not able to meet demand and others choose to use another moniker,”​ such as natural or non-GMO, “instead, that is a threat to our industry,”​ she explained.

That said, she also recognized the threat posed by imported fraudulent organic products is real and must be addressed head on first by defining the problem and second by investing in more complete supply chains and data at each point in those supply chains.

Building government partnerships

She also noted that while the organic industry has the sophistication and technical expertise to make this happen, it needs to work with the government.

This might be easier said than done.

“True partnerships require sharing information among agencies that don’t always work together and that have different and varying levels of understanding of organics and your supply chains. So, they are going to need some pretty clear instructions and the text of the farm bill is a great place to start,”​ she said.

But, she added, “the devil is in the details,”​ and even if a bill passes the related rulemaking can drag out.

“We can’t always wait for the government to get its act together through its procedures. We need to start encouraging that culture change right now. You can start demanding that agencies work together and you can help connect them in ways that they can do that,”​ she said.

This includes sharing information with USDA and customs and introducing foreign agriculture service colleagues who work at embassies across the globe with those who are certifying organic product and working with organic farmers, she said.

While these steps may be daunting or uncomfortable, Vetter said they ultimately are what is needed to encourage consumer trust in organic and build the industry for the long-term.

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