The document discusses trade policy issues affecting the U.S. pork industry. It summarizes data on rising U.S. pork exports in recent decades due to various trade agreements. It then outlines key free trade agreements and sanitary/phytosanitary barriers impacting the industry in markets like China, Russia, South Africa, and Taiwan. Resolving non-tariff barriers will be important for further growth in exports and producer prices.

1. Trade Policy for a
Dynamic U.S. Pork
Industry
Laurie Hueneke
Director of International Trade Policy, Sanitary and Technical Affairs
National Pork Producers Council
BIVI Summer Health Seminar ● Wrightsville Beach NC
August 10, 2012

2. U.S. Pork Exports
2,250,000
Canada FTA China
2,100,000 WTO Accession
1,950,000 Russia Pork
1,800,000 NAFTA TRQs
(Mexico) U.S. -Taiwan
1,650,000
Pork Deal
U.S. - Korea
1,500,000
Metric Tons
1,350,000
1,200,000 WTO Uruguay Round
U.S. - Colombia
(Japan & South Korea)
1,050,000
900,000
DR-CAFTA
750,000
600,000
450,000
Australia
300,000
FTA
150,000
0
Year

3. U.S. Pork Exports
U.S. Pork Exports
Percentage of Production
25%
2011 Estimated 20%
Percent Exported:
23% (Muscle Meat Only)
Percentage
15%
27% (Plus Variety Meat)
Export Value per Hog: about $55 10% % Exported
About 25 percent higher than 2010
5%
0%
Year

4. U.S. Pork and Pork Variety Meat Exports
Volume Value
(Metric Tons) (US $1,000)
January-December January-December
Country/Region 2010 2011 % Change 2010 2011 % Change
Japan 434,799 493,315 13% 1,645,254 1,962,674 19%
Mexico 545,914 537,531 -2% 986,987 1,041,998 6%
Canada 183,027 206,278 13% 618,325 737,594 19%
China/Hong Kong 294,171 483,323 64% 462,665 909,954 97%
Russia 82,902 69,382 -16% 204,345 217,076 6%
South Korea 86,970 188,307 117% 189,801 497,089 162%
Australia 52,449 64,351 23% 148,422 204,637 38%
ASEAN 66,618 53,471 -20% 134,457 129,175 -4%
Central and South America 59,696 72,172 21% 142,206 187,113 32%
Caribbean 42,806 34,147 -20% 92,586 85,652 -7%
European Union 14,993 8,228 -45% 46,695 32,042 -31%
Taiwan 31,012 26,981 -13% 56,925 53,832 -5%
Other 21,642 17,969 -17% 52,261 49,828 -5%
World Total 1,916,999 2,255,456 18% 4,780,929 6,108,664 28%

5. U.S. Pork and Pork Variety Meat Exports
Volume Value
(Metric Tons) (US $1,000)
January-May January-May
Country/Region 2011 2012 % Change 2011 2012 % Change
Japan 209,939.9 199,062.1 -5% 790,592 869,147 10%
Mexico 220,129.0 254,059.3 15% 408,811 463,551 13%
Canada 80,335.3 91,423.8 14% 275,408 328,719 19%
China/Hong Kong 144,373.1 192,924.9 34% 212,476 389,197 83%
Russia 26,883.9 37,074.40 38% 79,750 109,547 37%
South Korea 113,565.4 77,789.6 -32% 275,397 222,804 -19%
Australia 28,819.2 29,751.0 3% 92,159 92,209 0%
ASEAN 22,856.6 17,995.9 -21% 50,804 47,250 -7%
Central and South America 29,572.1 33,398.1 13% 73,419 85,427 16%
Caribbean 14,946.1 13,976.8 -6% 35,068 34,862 -1%
European Union 3,760.7 3,369.1 -10% 14,234 9,828 -31%
Taiwan 14,762.7 8,108.0 -45% 25,722 18,195 -29%
Other 6,922.5 9,549.8 38% 20,488 26,348 29%
World Total 916,866.5 968,482.8 6% 2,354,328 2,697,084 15%

6. Free Trade Agreements
(FTAs)

7. Free Trade Agreements
• Focus now shifts to implementation of FTAs
• Korea FTA entered into force March 15, 2012
– Opposition party did not take control in April
– Opposition wanted certain provisions renegotiated:
• i.e. auto provisions and tariff schedules for pork
• Colombia FTA entered into force May 15,
2012
• Panama FTA expected to enter into force later
in 2012

8. Free Trade Agreements
Why are these three FTAs important to
U.S. pork producers?
• Increase U.S. pork exports by more than
$770 million annually
• Add more than $11 to U.S. live hog prices
• Generate more than 10,200 pork industry jobs
• Removal of trichinae barrier sets a precedent
for addressing it in other markets

9. Trans-Pacific Partnership
(TPP)

10. TPP = $$

11. TPP
• NPPC 1st in private sector to support
• Address tariff, but real payout for U.S.
pork is resolving sanitary (SPS) issues
– Trichinae risk mitigation requirements
– Ban on products due to PRRS or PMWS
– Ban on the use of pathogen reduction
treatments (PRTs)
– Limited plant approvals for export
– Residue level differences for vet drugs

12. TPP
• Vietnam market potential = $600 million
• Malaysia market potential = $100 million
• Mexico and Canada were invited to join the TPP
negotiations in June 2012
• Japan expressed interest in joining negotiations in Nov.
2011
– U.S. and Japan continuing consultations
• U.S. officials have highlighted outstanding issues to Japan’s entry
– NPPC supports Japan’s entry as soon as possible
• Just finished the 13th Round of negotiations in San
Diego, July 2012
• Next Round in September, Leesburg, VA

13. Japan & TPP

14. U.S.-European Union FTA

15. U.S.-EU FTA
• U.S.-EU Working Group considering options to increase
trade through a reduction of barriers – a possible FTA
• EU has PTAs, not FTAs – Must include agriculture
• NPPC led coalition letter with 49 ag orgs and businesses
• NPPC filed comments on EU pork barriers
– TRQ smaller than Uruguay Round minimum access
– Ban on Ractopamine
– Trichinae mitigation
– Prohibition on pathogen reduction treatment
– Plant approvals
• U.S. and EU leaders have urged the working group to
reach a recommendation on negotiations later this
year

16. Codex Alimentarius

17. Codex Alimentarius
• International standard setting body for food safety and
harmonization of trade standards
• Ractopamine hydrochloride went through the process,
found to be safe THREE times by international
independent scientists, approved for use in 26 countries,
and held at final step for 4 years
• Outreach and coordination within US and outside of US
• Final international standards adopted in July 2012
– Beef and pork muscle, fat, liver, kidney
• Countries not obligated to adopt standards, only a guideline
• Increasing importance of Codex due to trading partners
adopting for domestic and international trade

18. South Africa

19. South Africa
• South Africa notified the WTO that it is imposing
additional requirements on pork from countries with
PRRS, including the U.S.
• PRRS is not a food safety issue and does not pose a risk to
human health
• NPPC will be advocating for South Africa to reconsider
their proposed requirements and not move forward with
implementation of this unscientific barrier to trade.
• Also impose a stringent time/temp requirement
• NPPC working with USG to renegotiate pork export
certificate
• If lift all barriers, market increases $40 million

20. Mandatory Country of Origin
Labeling (MCOOL)

21. MCOOL
• U.S. Mandatory Country-Of-Origin Labeling law
found in violation of the United States’ WTO
trade obligations
• U.S. appealed WTO Panel decision in late March
• An Appellate Body decision due late June
• Risks retaliation from Canada and Mexico if U.S.
does not comply

22. MCOOL
Nov. 18, 2011 Mar. 23, 2012 June 29, 2012
WTO: MCOOL Violates U.S.: Appealed WTO: Upholds
U.S. WTO Obligations WTO Ruling Nov. 2011 Ruling
July 23, 2012 July - October 2013 May 2014
Implementation Period Implementation Compliance Panel
Begins Period Ends Concludes
(Avg. 12-15 months)
November 2014 - If the United States has failed to comply, the
retaliation process can commence
May or June 2015 - retaliation award should be issued

23. Russia’s WTO Accession

24. Meat Exports to Russia
U.S. Meat Exports to Russia, 2005-2011 (Quantity)
1,000,000
900,000
800,000
700,000
Metric Tons
600,000
500,000 Pork
400,000 Beef
300,000 Poultry
200,000
100,000
0
Year

25. Russia’s WTO Accession
Russia Political Situation
• Presidential election was in March 2012
• Vladimir Putin returned as president
• Putin faces a new political and economic environment
Timeline
• November 10, 2011, Russian WTO Accession Working Party concluded
• Approved at WTO Ministerial Conference, December 15-17
• Will become a member of the WTO on August 22
• Congress must pass Russia Permanent Normal Trade Relations (PNTR) in order
to get all the benefits of Russia’s WTO accession.

26. Russia’s WTO Accession
Working Party Report for Pork
• Significant achievement with TRQs
• Global 400,000 MT with no country specific TRQ, plus 30,000 MT trimmings.
• In-quota tariff rate of 0%.
• Out-of-quota rate of 65% (down from 75%).
• TRQ will be replaced by a flat top rate of 25% as of January 1, 2020.
TRQ Level (MT) Global (Country Specific) In-Quota Rate Out-Quota Rate
Pork 400,000 Global 0% 65%
Pork TRQ will be replaced by a flat tariff of 25% on of January 1, 2020.
Beef 560,000 Global (U.S. 60,000 MT) 15% 55%
Poultry 350,000 Global (EU 90,000 MT) 25% 80%
No set phase out for Beef & Poultry TRQs
• However, we need more on SPS!!

27. Russia—SPS Barriers
• Freezing requirements for trichinae, do not allow
fresh/chilled
• Zero tolerance for pathogens
• Zero tolerance for tetracyclines
• Do not recognize systems-based inspection &
certification/equivalence
• Threatening ban on use of ractopamine

28. Russia
Why is Russia’s WTO accession important to U.S. pork
producers?
• Without SPS commitments from Russia the beneficial TRQs
mean very little. NPPC trying to get a bilateral SPS deal.
• In 2008, prior to Russia’s actions, U.S. pork reached a record
level of over 200,000 MT. Since then exports have fallen by
60%.
• Dr. Hayes of Iowa State forecasts U.S. pork exports to be at
least $400 million per year the next few years – IF Russia
stops using illegitimate SPS measures to limit U.S. pork.

29. China

30. China
• Domestic pork consumption 50 million (MT)
• Estimated that the market for U.S. pork in China could
be well over 1,000,000 MT.
• U.S. pork imports are constrained by:
• Ban on the use of ractopamine in imported pork
• Discriminatory value added tax (VAT)
• Large subsidies to domestic producers
• Other restrictive practices
• U.S. pork imports through the roof in 2011.
• China: $713 million
• China/HK: $909 million

31. Comparison of Production
China
$113
Feed cost in China: $61
USA
$63
Dollars per Hundredweight

32. China
Net Chinese Pork Imports as a Percent of
Chinese Pork Consumption
1.5
1
0.5
0
Percent
-0.5
-1
-1.5
-2
-2.5
Year

33. Why important to U.S. pork producers?
Impact of Additional Chinese Imports of U.S. Pork on the US Economy
Additional Imports as a Percent of Chinese Consumption
One Quarter One Half
Economic Indicators One Percent Five Percent
Percent Percent
US Pork Export Value
267,173 534,346 1,068,693 5,343,463
(Thousands Dollars)
US Pork Export Volume
125.13 250.25 500.50 2,502.50
(Thousand Metric Tons - CWE)
Total U.S. Jobs Created 6,849 13,698 27,396 136,981
Direct U.S. Pork Industry
3,393 6,786 13,572 67,862
Jobs Created
Share of U.S. Production
1.24 2.49 4.98 24.90
(Percent)
Impact on U.S. Live Hog Prices
3.72 7.44 14.88 74.39
($/Head)

34. Taiwan

35. Taiwan
• Started banning pork raised with ractopamine in 2007, beef in 2011.
• Notified to WTO in 2007 adoption of Codex draft MRL.
• Some in Taiwan have indicated that it is possible to set safe levels for
ractopamine
• Taiwanese pork producers are largest segment of Taiwan
agriculture.
• Legislative Yuan passed legislation on beef MRLs on July 25, 2012
• Maintaining all bans on the drug in pork
• Department of Health reached agreement for an MRL of 10 ppb for
beef, the standard adopted for muscle by Codex in July
• Taiwan is concerned TIFA is stalled while rest of the region is
negotiating trade deals without them
• Must address both beef and pork ractopamine MRLs for TIFA to
restart

36. Thailand

37. Thailand
• Ban on ractopamine despite their FDA risk assessment
that it is safe.
• Dept. of Livestock and Development rarely grants
import licenses for U.S. pork with no justification.
• Import duties range from 30% to 40%.
• Import permit fee for pork
– 5 Baht per kg or US$162 per MT
• Removing these barriers will result in annual U.S. pork
exports of $30-35 million.

38. Japan’s MHLW Positive
List of Vet Drugs

39. Japan’s MHLW Request
• Japan’s Ministry of Health, Labor and Welfare (MHLW) is
asking for scientific data for on-going work to develop a
negative list
• Over 300 compounds on list and 6 compounds on list
approved and used in U.S. pork production
• Working with FAS, USTR, AHI & individual companies to
submit data to ensure compounds not banned by Japan
1) Altrenogest – Merck 4) Neomycin – Pfizer
2) Bacitracin – Pfizer 5) Sulfachloropyridazine – BI
3) Carbadox – Phibro 6) Virginiamycin – Phibro

40. Thank you