U.S. Markets open in 5 hrs 49 mins

Cheese at the heart of trade debate

Shibani Joshi

 Ordering a deli-made turkey and swiss-like cheese sandwich doesn’t quite have the same ring to it. But if the European Union’s current measures to limit the export of U.S. cheese proceeds, many of the cheeses we buy in our dairy aisle won’t sound the same either. “Feta-like” and “similar to Parmesan” could be the new names for common cheeses we buy in grocery stores, if they aren’t made in Europe. 

The 28-country block is currently pushing efforts to prevent certain cheeses that it believes have geographical significance because they are named after European cities. This measure would prohibit American dairy farms from selling varieties such as muenster, gorgonzola and provolone in international markets. It is similar to provisions that keep California-made sparkling wine from being called champagne.

But this new dairy-focused trade restriction could deal a major blow to U.S. producers, who face stagnant domestic sales, and are pinning growth hopes on dairy exports to international markets. According to a report issued by the Congressional Dairy Farmer Caucus, U.S. dairy exports have risen dramatically, reaching $6.7 billion globally in 2013 and accounting for more than 15% of domestic milk production. Foreign markets now account for one day of milking every week.

The EU trade restriction could deal a major blow to American farmers who look to cash in on China’s growing fondness for dairy. Just this summer the USDA and the Food and Drug Administration were able to get the Chinese government to agree to import U.S. dairy products, including products like American-made swiss, cream cheese and others. Labeling a product as “gouda-like” and “similar to provolone” could inhibit foreign sales, particularly in the booming Chinese market.

To the U.S. dairy industry, China is a source of tremendous profit potential.  Dairy shipments to China grew to $706 million last year, up from $137 million in 2009, according to the U.S. Dairy Export Council. In addition, the Council writes, in a report issued on China last month, that Chinese dairy demand will increase by 42% by 2024 with imports from the United States and other countries the “key to feeding the additional mouths” in China.  In the first quarter of this year, Chinese imports of cheese, whey and other products grew 58% from a year ago.  

Congress continues to press the White House, which continues trade talks with EU counterparts, on the issue.  In May, a bipartisan group of 177 members of Congress came together to urge the Obama administration to use current trade talks with the EU as leverage to remove the dairy barriers.  

Senator Charles E. Schumer (D-NY) is also pressing for resistance to the proposal. In March, he authored a letter, co-signed by a bi-partisan group of 55 Senators, concerned that exporting cheese under a different name “would significantly devalue the product, or forgo the sales entirely.”

Shumer goes on to write  ”I have said it before, and I will say it again: muenster is muenster, no matter how you slice it. We must do all we can to protect the cheese industry from harmful and unfair free trade deals”

Shibani Joshi is the creator of www.ShibaniOnTech.com and can be followed on Twitter @shibanijoshi