Trade deals pressure US cheese makers
Countries form own pacts as more view U.S. as unreliable trading partner
WASHINGTON – The asiago cheese sitting on the shelves in Mexico still looks the same as it has for years.
The wheels and the wedges are the same. The familiar packaging is the same. What’s different is the name.
In Mexico, asiago cheese can no longer be labeled and sold as asiago unless it comes from the alpine region of northern Italy where the mild, nutty-flavored formaggio originated.
The labeling restrictions are part of a new trade deal that Mexico signed in April with the European Union – one of several trade pacts that countries around the globe have been pursuing with each other, often with ramifications for U.S. companies.
Other nations have been driven to form their own trade pacts in part, analysts say, because of the Trump administration’s focus on slapping tariffs on imports and updating a 25-year-old agreement with Canada and Mexico instead of negotiating new deals that would expand markets for U.S. goods.
The European Union has been particularly aggressive – signing new deals with Mexico and Canada, finalizing an- other agreement with Japan and announcing plans to hold separate talks with Australia and China. But other countries also are pursuing deals of their own.
“Most of these countries continue to view trade as beneficial to their economic growth, to job creation and to attract direct foreign investment,” said Wendy Cutler, a top official in the U.S. Trade Representative’s office under President Barack Obama.
But many also “are trying to reduce their dependence on the United States
now, viewing the U.S. as an unreliable trading partner,” she said.
Trade deals that exclude the U.S. can still have consequences for U.S. companies. Hence, the asiago imbroglio.
“We make asiago, we sell asiago, we’ve done that in Mexico for years,” said Blair Wilson of Sartori Cheese, a family-owned company in Plymouth, Wisconsin, that makes asiago, parmesan and artisanal cheeses and exports them to 49 countries around the world.
But the asiago Sartori exports to Mexico now must be sold under a different name because of labeling restrictions under the new trade agreement between Mexico and the European Union. The restrictions are part of a global push by the EU to stop foreign products from being sold under a name identified with a particular region in Europe, in the same way that a bottle of sparkling wine can be labeled champagne only if it comes from the Champagne region of France.
Sartori now markets the asiago that it sells in Mexico as “Sartiago” – a hybrid of asiago and the company brand. It’s the same cheese that has been on store shelves, restaurant menus and dinner tables for years. But Sartori’s sales of asiago, or “Sartiago,” have fallen in Mexico by 20 to 30 percent since spring, when the new labeling took effect.
Consumers are confused by the new name, Wilson said. He blames the EU for demanding that the labeling restrictions apply to names commonly used around the world, such as asiago, parmesan and feta.
“What they are doing is trying to go against decades of trademark law, forcing us and others who have created these markets in other countries to try to come up with a new name for what is the standard product,” Wilson said. Other U.S. dairy producers agree. “It’s insane,” said Jaime Castaneda, senior vice president of trade policy for the U.S. Dairy Export Council and the National Milk Producers Federation. “It’s all about (the Europeans) being noncompetitive, trying to take away the markets that others have created – not the Italians, not the French – the markets that others have created. And they want to take that away.”
The competitive pressures on U.S. companies may grow even worse as other countries bypass the U.S. and forge trade deals of their own.
After President Donald Trump pulled the U.S. out of the Trans-Pacific Partnership, the 11 remaining countries, including Canada, Japan, Australia, Vietnam and New Zealand, decided to go ahead with the trade agreement on their own. The countries, which represent 13 percent of the global economy, signed the new deal in March.
“I think there was profound shock and disappointment and a view that they can’t rely on the United States, but they got over their disappointment and shock and banded together to go ahead with the agreement without us,” said Cutler, who helped negotiate the TransPacific Partnership and now serves as vice president of the Asia Society Policy Institute, a nonprofit group.
Several Asian countries also are negotiating a deal with the Latin American countries that make up the Pacific Alliance – a trade bloc that includes Chile, Colombia, Mexico and Peru. Many of the deals have been under negotiation for years. But in some cases, the talks have escalated in recent months.
Analysts attribute that to the Trump administration’s policies, such as the tariffs on imports including steel and aluminum, the ongoing trade tensions with China and the decision to focus primarily on renegotiating the North American Free Trade Agreement with Canada and Mexico instead of forging new deals to open up new markets.
“I do think there are some instances where governments have proven eager to move forward with trade negotiations as a way to counter some of the uncertainty in the global trading system today,” said John Murphy, senior vice president for international policy at the U.S. Chamber of Commerce.
U.S. companies pay the price when other countries sign trade agreements that don’t include the United States. Countries often reduce or eliminate tariffs as part of such trade deals, but American companies still must pay the higher rates because the U.S. isn’t part of those agreements. That places U.S. companies at a competitive disadvantage in those markets, Cutler said.
Chris Garcia, former deputy director of the Commerce Department under Trump, agrees Trump probably helped escalate the trade talks among other nations. But he sees that as a positive.
“I think the president has really shaken up much of the status quo as he pushes his ‘America First’ policies, which I believe have been adopted by many other nations who now understand, ‘Let’s see if we can get a better deal with some of the other nations that we trade with,’ ” Garcia said.
In Mexico, meanwhile, Sartori and other U.S. companies fear the market for their cheeses will continue to melt away under the labeling restrictions imposed under Mexico’s new trade deal with the European Union.
“We’ve invested in that market – we’ve built that market,” Wilson said.
But unless the labeling restrictions are lifted, “it’s going to make it very difficult to invest in Mexico” in the future, he said.