WORLD TRADE SITUATION AND POLICY UPDATES
Public comment period on organic rule extended
On February 6, Agriculture Secretary Dan Glickman announced that the public comment period for USDA's proposed regulation to implement the National Organic Program (NOP) has been extended for an additional 45 days. The comment period, originally scheduled to end on March 16, will continue through April 30, 1998. At the time of the announcement, more than 4,000 comments had been registered with USDA. Citing the complexity and importance of the issue, the Secretary said the extension would allow opportunity for even greater public participation in the rulemaking process.
Full text of the press release can be found at the USDA web site: http://www.usda.gov [click on "News & Releases", "latest releases", and choose press release # 0063.] To access the full text of the proposed rule and other information relating to the NOP, visit USDA's NOP website: http://www.ams.usda.gov/nop
Switzerland implements organic regulations
Switzerland's new organic regulations took effect on January 1, 1998. The regulations are patterned after existing EU organic standards, but appear to be somewhat stricter. Swiss standards prohibit use of genetically modified organisms (GMOs) in organic products, as well as in the feed ration of organically raised livestock. As the regulations were being developed, a controversy arose about the possible use of the term "ecological" for non-organic foods. The final regulation restricts use of the term to organic products.
With organics constituting an estimated five to 15 percent share of the total food market, the Swiss public has shown significant interest in the new standards. Production of organic food products is increasing, spurred by premium prices in the market, high government subsidies, and advertising by the major retail organizations. However, the U.S. presence in the Swiss organics market is limited at this time. Although the regulation contains provisions for recognizing organic products from other countries, that recognition does not currently extend to organic products from the United States.
USDA seeks access for Florida citrus to the Philippines; technical team visit planned
As part of ongoing USDA efforts to secure access to the Philippines for Florida citrus, FAS and APHIS have arranged for a visit by technical officials from this country. This initiative is being supported under the EMO Technical Issue Resolution Fund.
A two-person team of senior level plant quarantine officials from the Philippines is tentatively scheduled to visit Florida the week of March 2 to observe citrus production, packing, and certification procedures. The objective of the visit is to address the Philippines' quarantine concerns and secure a lifting of the existing phytosanitary-based import ban on Florida citrus. The Philippines is already an excellent market for a number of U.S. fresh fruits. Exports of all fresh fruits from the United States to this country in CY1996 topped $32 million, an increase of a 127 percent from the level posted in CY1992. Were Florida citrus to gain access, it is estimated that shipments could reach $3-5 million annually in the near term.
Argentine technical team concludes Florida citrus visit
A two-person team from Argentina's plant quarantine agency, SENASA, has wrapped up a week long EMO-funded visit to Florida's citrus production areas. While in Florida from January 26-30, the Argentine team visited citrus production areas and observed quarantine measures relating to Caribbean fruit fly and citrus canker. The outstanding technical issues were narrowed considerably as a result of the visit, and it is hoped that SENASA will now conclude its ongoing pest risk assessment within the next few months.
The Florida visit came about as a result of Secretary Glickman's December visit to Argentina, at which time he raised the longstanding issue of that country's phytosanitary-based import ban on Florida citrus. Argentina's Agriculture Secretary responded at the time by pledging to address the issue in a timely fashion.
Argentina is presently a modest, but growing market for U.S. fresh fruit. Exports of all fresh fruits from the United States to this country in FY1997 were valued at $2.3 million. It is estimated that shipments of Florida grapefruit could reach $1 million annually in the near term were that state to achieve access the Argentine market.
Indonesia duty cuts to benefit U.S. horticultural exports
The Government of Indonesia (GOI) has reduced its tariffs, effective February 1, 1998, on a range of horticultural and other agricultural products, according to the Agricultural Counselor in Jakarta. Of particular note, duties on fresh fruit, dried fruit, and tree nuts were reduced to a level of 5 percent ad valorem, compared to the previous tariffs which ranged from 10 to 25 percent.
A January IMF package of financial aid for Indonesia provided for the duty cuts, which were implemented with the stated intention of providing Indonesia's consumers with enough reasonably priced food. While the reductions will not completely offset the depreciation of the rupiah against the U.S. dollar which has occurred in recent months, they will be helpful to U.S. exports. No indications have been given about how long the GOI will keep these tariffs in place.
Indonesia has been a rapidly expanding market for U.S. horticultural products in recent years, with shipments through the first 11 months of 1997 valued at over $80 million, up 21 percent from the previous year. Fresh fruit represents the United States' leading horticultural export item to Indonesia, accounting for well over half of the total value of annual horticultural product sales. While the currency devaluation has negatively impacted the market, U.S. shipments of horticultural products to Indonesia during November 1997 were off only 6 percent (value basis) compared to November 1996.
The European Union announces a new grubbing-up program for apples, pears, peaches and nectarines
On December 11, 1997, the EU announced a new grubbing-up program for two product groups, apples/pears and peaches/nectarines. The program will pay 5,000 ecu per hectare (about $5,500) for the 1998 marketing year, for the removal of an entire orchard, and 4,000 ecu per hectares for partial removal. The program is limited to 10,000 hectares, per product group, for the entire EU. Each country has an allotment within these categories. For example, Greece was allotted 3,600 hectares of peaches and nectarines. The country allocation of area to receive payment is based upon the latest 5 year average of area under cultivation. Between marketing years 1991/92 and 1995/96 the EU averaged 462,000 hectares of apples and pears under cultivation; removal of 10,000 hectares is equal to 2 percent. Similarly, the average number of hectares of peaches and nectarines under cultivation between marketing years 1991/92 and 1995/96 was 270,000 hectares; a removal of 10,000 hectares is equal to 4 percent. According to "The 1995 Agricultural Situation Report in the European Union", published by the EU Commission, the total number of hectares under cultivation for peaches and nectarines steadily increased from 245,000 hectares in 1991 to 307,000 hectares in 1993. Data for 1994 and 1995 were not published.
It is difficult to evaluate the effectiveness of the two previous grubbing up operations (1990 to 1993 and 1994 to 1995). For example, the evaluation of the program for peaches is complicated because it applies to both peaches for canning and peaches for the fresh market. Production of fresh peaches may be two to three times as large as production of peaches for canning; and the withdrawal price of peaches also applies to both canning and fresh peaches. The withdrawal price sets a floor for producer revenue. A certain income is guaranteed every year and varies only with a political decision (i.e. the per unit price paid by the EU) and the weather (i.e. yield per acre). The incentive for grubbing-up must be sufficiently larger than this guaranteed income to induce growers to remove areas from production. In 1994/95 the withdrawal price for peaches was around 196.50 ecu per ton. In Greece alone Clingstone peaches account for about 25,000 hectares and freestone peaches account for about 17,000 hectares. It is estimated that almost half of the clingstone crop goes to withdrawal.
U.S.-Taiwan market access agreement to benefit horticultural commodities
U.S. and Taiwan negotiators signed a market access agreement on February 20 in Washington DC which will provide improved access for a number of horticultural commodities. The agreement, which includes both immediate and phased-in commitments, was presented as a key step toward the eventual accession of Taiwan to the World Trade Organization (WTO).
Taiwan authorities agreed to establish an annual import quota of 5,000 metric tons for fresh potatoes from the United States at the current tariff rate of 25 percent. The quota is to be valid for product shipped between April 1 and November 30, and will be filled on a first come, first served basis with no import license required.
The agreement also provides for an overhaul of Taiwan's import reference price system, a policy which has hampered market access for certain U.S. horticultural products, notably kiwifruit. The agreement establishes immediate steps to be taken by Taiwan steps to improve the system's transparency, as well as provide exporting countries opportunities to provide input to the reference price setting process.
Under the agreement, Taiwan agreed to immediate* tariff reductions on the following horticultural products to the level noted:
* The reductions noted are subject to the approval of the Legislative Yuan. The two sides expect that the changes will be implemented by July 15, 1998.
** Under the existing two tier tariff structure for grapefruit, Taiwan agreed to move the date the lower duty becomes effective from March up to January, a positive development for U.S. exporters. In addition, the duty for this time period is to be further reduced to a level of 15 percent on January 1, 2000.
*** This tariff is to be further reduced to 12.5% on January 1, 2000.