Washington Insider-- Monday

By DTN's Washington Insider

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

Europe May Seek Early TTIP Deal with U.S. Regarding Agriculture

The European Parliament's Agriculture Committee today will recommend that the European Commission work to achieve an "early and separate agreement" with the United States on the yet-unresolved agricultural issues being negotiated under the Transatlantic Trade and Investment Partnership (TTIP) free trade agreement. Chief among these are issues involving tariffs, geographical indications and sanitary and phytosanitary measures.

In a draft report to be introduced today, the committee also will call for TTIP to ensure that the EU's commitment to the "precautionary principle" is not undermined.

The European Parliament is expected to vote in May on its TTIP resolution, which will set conditions for a ratification vote if the EU and United States finalize terms for a free trade agreement. However, since it is expected that parliament will accepts the draft report of its Agriculture Committee, convincing the United States to agree to Europe's position on these controversial issues may be a heavy lift.

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Former Treasury Official Pessimistic About Changes for Tax Reform During Current Congress

Congress, already notorious for inaction, is even less likely this year or next to address a needed overhaul of the U.S. corporate income tax, according to former Assistant Treasury Secretary Pamela Olson. She told an audience in California last week that there is a good case to be made for restructuring the corporate income tax, chief among which is the fact that U.S. multinational companies are at a distinct disadvantage due to the way the tax code is currently configured

Though Congress seems to work best when it is up against a deadline, Olson said, in 2015 it is facing a series of pressing matters that promise to eat up considerable political energy and leave little time for discussion of the underlying problem, which is the inadequacy of the U.S. tax system to fund the federal government.

"We've got those things on the horizon for 2015 and most pundits expect that very little happens in 2016 because it is a presidential election year," Olson said. "There is a line about how you can't get anything done in a year that leads up to an election and you can't get anything done in a year when there is an election, and since we have elections every other year, we pretty much can't do anything anymore," she said.

Currently, the effective combined federal and state corporate tax rate is approximately 27%, the world's highest, said Olson. In contrast, the average effective rate among other Organization for Economic Cooperation and Development (OECD) OECD nations is 22.5%, and among non-OECD nations it is 16.5%, she added. One would think that these figures and the current non-competitive nature of the U.S. tax code would be enough to break the inertia holding Congress. Wishful thinking?

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Washington Insider: U.S.-EU Debate on Geographic Indicators Intensifies

There is yet another deep-seated conflict between the European Union and the United States beyond genetically modified organisms, and that is the differences over trademark production for Europe's Geographical Indications. These triggered intense and sometimes confrontational exchanges between stakeholders and some trade negotiators during a recent Transatlantic Trade and Investment Partnership conference held in the midst of the eighth round of TTIP talks.

Representatives from European groups in the food and wine sector claim that there is abuse of European names, symbols and flags that mislead consumers about the contents, quality and origin of products sold in the United States. However, much of that conflict is the fault of the EU which often seems to believe that any geographic indicator is a valid trademark, even if there is no difference in quality or other basic characteristic. As a result, the United States is pushing back, hard, on many EU claims.

For example, the United States Dairy Export Council calls the EU geographical-indicator demands over-extended and protectionist and that any attempt to use the recently concluded EU-Canada free trade agreement's language on GIs should be rejected. The U.S. dairy group also insisted — as it has in the past — that the GI issue should be dropped from the TTIP and negotiated in a separate forum.

Paolo Patruno, a representative from the Italian Food and Drink Industry Federation said that recent studies conducted by his group indicated that there is about $27 billion worth of food sold in the United States using Italian names, symbols or flags but that only about $6 billion of it is produced in Italy. He argues that "This is clearly an abuse of Italian names, symbols and flags and misleading information for consumers."

Following the IFDIF's presentation at the conference, Patruno was asked by Dan Mullaney, the lead U.S. trade negotiator in the TTIP talks, if the Italian-American immigrant community in the United States was justified in using Italian names and symbols and if their efforts helped boost food imports from Italy. Patruno said that the key issue is transparency for consumers, as well as the rights of Italian food and wine producers.

"Consumers should be informed where a product is actually produced," Patruno said, so, no give there.

Maike Moeller, speaking on behalf of the U.S. Dairy Export Council, said that U.S.-produced cheese worth $21 billion carries European-origin names as a reflection of immigrant roots of many in the United States that trace back to many European countries. She said that if the EU-Canada free trade agreement were to be a model, it would mean that producers in the United States and elsewhere would have to relinquish their right to use long-standing generic food names such as asiago, feta, fontina, muenster and gorgonzola. "This is a notion that we absolutely reject," Moeller said.

Another issue raised on behalf of the U.S. Dairy Export Council concerned EU bilateral agreements on GIs that have subsequently locked out U.S. exporters, including in South Africa, Singapore and Morocco, as well as in Canada should the EU-Canada deal be ratified.

Considering how contentious and financially important the GI issues are, Moeller said that the "negotiations on GIs should be dealt with in a separate forum in order to carefully assess the legitimate concerns of both sides."

The Office of the U.S. Trade Representative has maintained that it can accept some specific EU GI trademark protection demands, for example, Parmigiano Reggiano, but not more generic names, such as Parmesan or, in the drink sector, champagne. However, representatives from the European food and drink industry have rejected that approach.

The intensity of the debate about GIs underlines what is considered to be one of the most intractable issues in the TTIP negotiations. Some experts insist that the EU cannot expect to achieve the same results in the TTIP that it has obtained in other bilateral free trade agreements when it comes to GIs because U.S. consumers buy far more European food products than vice versa. Therefore, the EU has a significant trade surplus in the agriculture sector.

"The EU has little leverage on the issue," Fredrik Erixon, the director for the European Center for International Political Economy, told the press. Trade experts note that the GI area is yet another case of European intransigence in the face of science. If Italian GI cheeses offer distinctive tastes or other indicators, they would seem to have a claim for a trade mark. However, in many cases, these claims are especially thin and should be regarded as such, Washington Insider believes.

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