ORGANIC S INTERNATIONAL TRADE IMPACT

Transcription

1 ORGANIC S INTERNATIONAL TRADE IMPACT PANELISTS Bob Anderson, Principal, Sustainable Strategies Cheri Courtney, Director, Accreditation and International Activities, USDA National Organic Program Ted Jaenicke, PhD, Associate Professor, Penn State University Monique Marez, Associate Director, International Trade, OTA 10:30 11:45 a.m. Room 317 Baltimore Convention Center

2 ON DECK Meet the Panel Background on HS Code & Available Data What is Equivalency? What does the data show? What is happening in the field? What s next?

3 INTERNATIONAL ORGANIC TRADE Exports Strong Growth! $553.1M for % of total exports for same products Imports $1.28B for % of total imports for same products

4 USDA Certified Organic Products Exports to the World $2, Compound Annual Growth Rate = 25.4% $1,800 $1,600 $1,400 Millions $1,200 $1,000 $800 $600 $400 $200 $

5 HTS CODES 101 Harmonized Tariff Schedule How do you get an HS Code? Trade flows, both volume and $ amount 10 digit breakouts = statistical annotations Data for USDA, USTR, Census, CBP

6 HTS CODE BENEFITS Understand international market behavior Develop policy priorities Compare with conventional competitors Official data for negotiations

7 USDA GATTS SYSTEM

8 38 EXPORT & 40 IMPORT CODES Top ten organic exports: 1. Apples 2. Lettuce 3. Grapes 4. Spinach 5. Strawberries 6. Carrots 7. Cauliflower 8. Coffee (roasted) 9. Tomato Sauce 10. Pears Top ten organic imports: 1. Coffee, 2. Soybeans 3. Olive Oil 4. Bananas 5. Wine 6. Honey 7. Almonds 8. Mangoes 9. Avocados 10. Yellow Dent Corn

9 WHAT IS EQUIVALENCY? Cheri Courtney Director Accreditation & International Activities USDA National Organic Program

10 STATE OF ORGANIC TRADE Organic trade expanding Many governments have established organic standards and control systems Import requirements may be barriers for farmers/suppliers to access export organic markets

11 BARRIERS TO TRADE Different organic standards Cost of certification to multiple standards Record keeping costs to maintain certification to multiple standards

12 WHAT IS AN EQUIVALENCY ARRANGEMENT? A trade arrangement between countries that recognize the other s organic certification designation to be equivalent. Allows products produced, processed, and certified to either country s organic standards to be sold as organic in both countries. 12

13 BENEFITS TO ORGANIC EQUIVALENCY Reduce barriers Reduce costs of duplicative certification, inspections Facilitates the growth of the global organic industry Increase markets access 13

14 EQUIVALENCY PROCESS Equivalency is determined by assessing and comparing two regulatory systems, the standards, certification, accreditation, compliance and enforcement procedures, legal authority etc., to determine whether the principles and outcomes achieved are equivalent. 14

15 STEPS TO REACH AN EQUIVALENCY DECISION Side by side evaluation Meetings On-site assessment of control system NOP continually monitors & ensures compliance 15

16 ORGANIC EQUIVALENCY ARRANGEMENTS US-Canada Organic Equivalency Arrangement June 2009 US-EU Organic Equivalency Arrangement June 2012 US-Japan Organic Equivalency Arrangement January 2014 US-South Korea Organic Equivalency Arrangement June 2014 US-Switzerland Organic Equivalency Arrangement July

17 EFFECTIVENESS OF EQUIVALENCY TED JAENICKE, PhD Associate Professor Penn State University

18 BACKGROUND FOR ANALYSIS Organic Equivalency Policies Reciprocal arrangements: Canada (2009) European Union (June 2012) Japan (January 2014) South Korea (July 2014)* Switzerland (July 2015)* Non-reciprocal recognition of U.S. organic exports Taiwan (2009) Organic Trade Data 2011: HS codes for organic products first issued 23 organic export products with HS codes 20 organic import products August 2015: 34 organic export products with HS codes 40 import products Organic products with codes represent only a fraction of all organic trade. Note: because of the late effective dates, neither the South Korea or Switzerland policies are model in this analysis. Key for analysis: Organic HS codes pre-date the E.U., Japan, and Korea equivalency arrangements, but not Canada or Taiwan.

19 The Gravity Model of International Trade Background Background info when it s been used Used only once for the U.S. HS-coded trade data A Model to Be Estimated (Best) Fit log XX ii = aa + bb 1 log GGDDDD pppppp cccccc ii + bb 2 log kkkk ii + cc PPPPPPPPPPPP ii + dd 1 NNNNNNNNNN ii + dd 2 EEEEEEEEEEEEE ii + dd 3 SSSSSSSSSSSSSSSSSSSSS ii + dd 4 FFFF ii + εε ii XX ii is the U.S. s exports to or imports from country i. The key estimate of interest is c, which gives an indication of the policy impact. Empirical obstacles A choice: 2011 codes only, or more complete set of codes A zero problem: Some countries with zero organic exports or imports in a particular year

20 Results: Exports Using 2011 HS Codes Predicted Change in Annual Organic Exports Due to Organic Equivalency Policies (2011 HS Codes) Model Version Negative Binomial zeros included Policy variable All Policies together Individual Policies Equiv Policy Any 57.50% - E.U. Equiv Policy % # Canada Equiv Policy % Japan Equiv Policy % Taiwan Export Policy %

21 Results: Imports Using 2013 HS Codes Predicted Change in Annual Organic Imports Due to Organic Equivalency Policies (2013 codes, data) Model Version Negative Binomial - Zeros Included Policy variable All Policies together Individual Policies Equiv Policy Any % E.U. Equiv Policy +91.3% Canada Equiv Policy % Japan Equiv Policy %

22 Results: Imports Using 2013 HS Codes Predicted Change in Annual Organic Imports Due to Organic Equivalency Policies (2011 codes, data) Model Version Negative Binomial - Zeros Included Policy variable All Policies together Individual Policies Equiv Policy Any -45.3% E.U. Equiv Policy -60.2% Canada Equiv Policy +64.9%# Japan Equiv Policy %

23 EQUIVAELNCY IN PRACTICE BOB ANDERSON Principal Sustainable Strategies

24 CONSIDERATIONS BEYOND #S Scientific Research CODEX as norm Relationships / confidence Enhanced Political Will Constant Communication with Industry Transparency & Open Availability of public information Technical Analysis, Mitigation & resolution at implementation and ongoing

25 CANADA & EU SUCCESS HEIGHTENED GLOBAL DEMAND Japan Korea Taiwan Switzerland Mexico Latin America New Zealand

26 EQUIVALENCY SUCCESS STORIES Canada Trade UP 14% EU Trade Up 44% Japan Trade Up 17% (after steady declines) Korea Trade Up 50% (markets were closed) U.S. Global Organic Trade Up 20 % Estimated at $3.2 Billion Dollars