US SEEKING ADDED PROTECTIONS FOR GROWERS OF SEASONAL AND PERISHABLE GOODS

US SEEKING ADDED PROTECTIONS FOR GROWERS OF SEASONAL AND PERISHABLE GOODS
Bobby Seeber

In its July 2017 report to Congress, the Office of the US Trade Representative (USTR) identified new authorities for perishable and seasonal anti-dumping (AD) and countervailing duty (CVD) investigations as a US negotiating objective for a revised NAFTA.[1]

The US seeks to create a special, fast-track mechanism for investigating fruit and vegetable imports. US negotiators are expected to table a proposal that would allow seasonal growers to qualify as speaking for the entire domestic industry in certain trade remedy cases despite not representing 51 percent of the defined industry. Regional grower organizations representing less than 50 percent of nationwide seasonal growers would therefore be able to trigger AD/CVD investigations.

Current NAFTA trade remedy provisions require that petitioners represent at least 50 percent of the domestic industry. Otherwise the call for trade action is regarded as frivolous.

Under the anticipated US proposal, the “period of investigation” to certify an AD or CVD complaint would be shortened to a few months, to better capture shortened ‘windows’ when inexpensive Mexican tomatoes compete with Florida product, or inexpensive Mexican avocados compete with Californian product.

The impetus for this initiative comes from select growers in Florida, Georgia, and California. The crosshairs are aimed squarely at Mexican product.[2] The imperative for achieving special seasonal and perishable trade remedy provisions is reflected in the last several US trade promotion authority statutes[3], enjoying bipartisan support.

 

AT THE WTO
This US proposal is not new. During negotiations at the World Trade Organization (WTO) Uruguay Round in 2006, the US had proposed that special trade remedy provisions be considered for perishable and seasonal agricultural products. The stated rationale at the time was that because of the special characteristics of perishable and seasonal products, producers were uniquely challenged to obtain meaningful relief from injurious dumping and/or countervailable subsidization.[4]

That proposal would have allowed seasonal growers to qualify as “the domestic industry” if the products were sold raw, and if their marketing seasons did not last longer than eight weeks after the products were harvested.

The US recommended then that the WTO more clearly recognize and better address the special characteristics of perishable, seasonal agricultural products in order to make the anti-dumping and countervailing duty remedies more accessible to all producers. The US proposal sought treatment of these types of investigations as cases requiring urgency, with abbreviated investigative processes and deliberations arrived at within three months.

The WTO Uruguay Round negotiations have since petered.

 

IMPLICATIONS OF THE US NAFTA PROPOSAL
The purpose of a regional, seasonal, perishable AD/CVD duty would be to limit import competition, with the consequence of reduced grocer shelf availability, selection and quality for such goods as tomatoes, avocados, bell peppers, watermelons, strawberries and blueberries, etc.

There is a concern amongst the broader US fruit and vegetable industry that the availability of expanded AD/CVD provisions for seasonal and perishable products amongst NAFTA partners may invoke similar protectionist reactions on products such as US apples, peaches and apricots which record significant exports to Canada and Mexico.[5]

Applying such provisions within the revised NAFTA risks disrupting the intricate food distribution chains that currently exist to ensure consistent continental supply of seasonal food goods. North American consumers have become accustomed to year round access to quality fruits and vegetables at a low price.

Where would the latest health food craze be if affordable avocados were not available year round for my Detox Roasted Vegetable Buddha Bowl?

The current intertwined business model sees continental distributors contract with major North American food chains to supply agreed-to volumes at specified times over the calendar year. In turn, those distributors contract with growers from Mexico and the US and Canada to ensure consistency in supply — after all, seasonal products are “in-season” somewhere on the continent.

Allowing expanded trade remedy authorities to be triggered at the whim of a small group of regional producers could severely disrupt the supply stability and cost predictability that has evolved under the existing NAFTA.

It could put a serious chill on my Buddha Bowl.

But beyond the economics, including such special trade remedy provisions in a NAFTA 2.0 would put the new agreement at odds with the existing WTO trade remedy provisions. So if accepted, either negotiators would hope that none of the Parties to the agreement would ever appeal a seasonal and perishable AD or CVD decision before the WTO, or (more likely), the issue is addressed by explicitly excluding the possibility of taking such matters before the WTO or including an explicit statement that the NAFTA provision takes precedence over WTO obligations.

Either way, adoption of seasonal and perishable AD/CVD provisions in a revised NAFTA is bound to make trade lawyers great again.

 

 

[1] The USTR report lists the following priority: “Seek a separate domestic industry provision for perishable and seasonal products in AD/CVD proceedings.” Summary of Objectives for the NAFTA Renegotiation, July 17, 2017, Office of the US Trade Representative, pg. 14.

[2] Florida Senators Rubio and Nelson sent a joint letter to USTR Lighthizer on August 31, 2017, advocating for special perishable and seasonal trade remedy authorities in the revised NAFTA. The Florida Congressional Delegation, led by House Representative Neal Dunn, did likewise.

[3] The US Trade Act of 2002, P.L.107-210; and the Bipartisan Congressional Trade Priorities and Accountability Act of 2015, 19 U.S.C. 4201(b).

[4] Definition of Domestic Industry for Perishable, Seasonal Agricultural Products, Communication from the US to the Negotiating Group on Rules, World Trade Organization,TN/RL/GEN/129, 24 April 2006.

[5] NAFTA Mischief In Fruits and Vegetables, July 26, 2017, Peterson Institute for International Economics.