USDA Ag Outlook Forum - Notables

Here are some other presentations fr on the USDA Ag Outlook Forum that might be worth a look:

Procedural Impediments to Regulation—The Ossification of the Rulemaking Process: Interesting presentation on the barriers to rulemaking that exist in the federal government and possible shortcuts - such as issuing "guidance" - that may be ways around the problem. By Jeffrey S. Lubbers Washington College of Law American University JSL26@aol.com


The Challenge of Increasing Trade: How to Address Linkages and Barriers Drawing lessons from two specific examples —Avocados and Apples: Presentation by David Orden and Everett Peterson: Fascinating presentation drawing comparisons between opening of U.S. market for Mexican avocados and the potential opening of the U.S. market for Chinese apples. I pulled some highlights on apple in the following excerpts:


On apples:
Apple production in China has increased substantially in recent years and now accounts for nearly half of the total global output. Correspondingly, China has highlighted apples (and also pears) as products for which it has sought market access in many of its negotiations with trade partners about agricultural technical barriers. China’s apple exports have skyrocketed as markets have been opened. In the 2004/05, China exported 850,000 metric tons of fresh apples, a nearly five-time increase in the export volume over five years. A large proportion of the increase in Chinese apple exports has gone to Pacific Rim markets. In North America, the importation of Chinese fresh apples from approved orchards and packers in selected provinces has been authorized by Canada since November 2004 but importation of fresh apples remains banned by the United States.
Opportunity: It is not as obvious that there is an economic opportunity for Chinese apples in the U.S. mark et as in the case of Mexican avocadoes. Chinese apples have obtained only about a 3-percent share of Canadian fresh apple consumption. The Chinese apples imported by Canada are mainly sold in the Asian communities at relatively high prices as a somewhat specialty product. In the European Union, Chinese fresh apples account for only about a 1-percent market share. Imported Chinese apples would similarly be likely to enter the U.S. market as a specialty item. This limits the economic gains but also limits the pest risks which increase a larger volume of trade.

On apple science:
Science: Since there has not been a U.S. risk assessment, the scientific evidence is less cohesive at this point in time. One can examine the risk assessments that Canada and other countries have made and the risk-mitigation measures they have imposed. From this, one can describe a prototype or hypothetical systems approach that might be adopted by the U.S. The decision by Canada provides some evidence that a risk assessment can support Chinese apple imports with feasible risk-mitigation requirements. Canada identifies 10 pests of concern and its risk-mitigation implementation is closely coordinated with Chinese sanitary authorities. But a process of pest identification, data collection, risk assessment and analysis of mitigation measures has only progressed to an early stage for the U.S.

On political will:

Political Will: The current political environment does not seem conducive for decisions that open U.S. markets further to imports from China. At the macroeconomic level, there is a large U.S. bilateral trade deficit and arguments are made that the Chinese currency should be revalued. There is concern about industrial competition in general from this lower-wage country. And the safety of products from China, from pet food to pharmaceuticals, has
made front-page international news. In this context, it would be difficult for the two governments to agree to intense efforts to reduce phytosanitary barriers for a new product.
It can be argued that NAFTA was also controversial when negotiated. But once a high-level political decision was made to reach the NAFTA accord it provided an institutional impetus for various bilateral trade issues to be addressed. There is no similar high-level accord currently under discussion between China and the U.S.

Analysis:
Without considering pest risk, it is assumed that Chinese exports to the U.S. would achieve about a 3-percent share of the total U.S. apple consumption and sell at a price above the U.S. market average, similar to the situation for Canada in 2003-2004. This results in small economic gains. Next the outcomes are evaluated with pest risks and related control costs taken into account. The probabilities of U.S. pest outbreaks due to the importation of Chinese fresh apples are not known. Thus, the risk probability levels are estimated that cause the expected change in U.S. welfare due to granting market access to Chinese fresh apples to fall approximately to zero. Higher levels of risk from trade would result in expected welfare losses.
In the case of the assumed lowest costs from pest infestations, an expected frequency of a trade-related pest outbreak of approximately 0.2 per year, or one every five years, leaves U.S. welfare unchanged. For the cases of assumed “average cost” and “high cost,” the expected frequency of an outbreak that leaves U.S. welfare unchanged drops to once in 16.7 and 50 years, respectively.

From the report's conclusions:
There are several general lessons from this case-study evaluation:
• In some instances, calls to reduce technical trade barriers may not be matched by real economic circumstances that would result in trade.
• In other cases, where exporters rightly perceive a real economic opportunity, they face multiple challenges. These challenges should figure into their business calculations and industry strategy.
• An industry seeking market opening needs to send the “A team” into the fray and even then recognize that its fate depends in part on contextual forces beyond their control.
• Appreciation is gained of the complex environment in which regulators operate. This may be no surprise for those with experience, but the point needs to be widely understood. Such understanding will enhance the functioning of the regulatory process.