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New Study Says “Abusive” EU Geographical Indications Policies Will Cost U.S. Producers Billions

Posted October 13, 2016

Surrendering to a European Union (EU) seizure of common food names would cost the U.S. dairy industry billions of dollars, slash domestic cheese consumption and increase prices for consumers, according to an analysis released earlier this week by Informa Economics IEG.

The European farm policy agenda, which many trade groups in the United States and elsewhere claim is focused on using geographical indications (GIs) to unfairly grant European food producers a huge commercial advantage, would force farmers and food producers outside of Europe to rebrand familiar foods with unfamiliar names. The resulting confusion in the U.S. domestic marketplace could shutter family farms, eliminate thousands of rural jobs and hurt the overall U.S. economy, the analysis said. The European Commission advocates extending GI protections beyond a small number of specialty foods to cover many food names that have little to no geographic identity and have long been commonly used by food producers around the world.

At today’s prices, the decline in U.S. cheese consumption due to the loss of common food names could amount to $2.3 billion in lost sales in three years, and $5.2 billion in 10 years. It could push dairy farm balance sheets below the break-even point for six out of 10 future years, costing farmers a cumulative $59 billion in revenue and forcing several thousand family dairy farms out of business, the analysis added.

The 60-page analysis was commissioned by the Consortium for Common Food Names (CCFN), an international alliance of companies and organizations dedicated to preserving the right to use common food terms. It was conducted by Informa Economics IEG and unveiled jointly by CCFN and the three major U.S. dairy trade associations: the National Milk Producers Federation, the U.S. Dairy Export Council and the International Dairy Foods Association.

According to the study, consumers will choose imported cheeses with names they recognize over domestic products with names they don’t recognize. As a result, plummeting demand for domestic cheese would put numerous U.S. cheese manufacturers – particularly specialty cheese manufacturers – out of business.

This harm would not be limited to just the dairy sector. As the impacts on dairy ripple through industries like transportation and veterinary services, the study said, the U.S. economy could lose up to 175,000 jobs. Also, consumers would face higher prices, fewer choices and confusion in the supermarket as familiar cheese names are replaced by unfamiliar ones.

“To avoid such severe consequences,” says CCFN Executive Director Jaime Castaneda, “the United States must aggressively oppose the carving up of markets and refuse to bestow monopolies on a few privileged European suppliers. The use of common names by the U.S. dairy industry – and indeed all other sectors relying on typical food terms – should be aggressively preserved, both for domestic and international use.”

Click here to download a 3-page summary of the report and here for a 50-minute webinar discussing the report’s findings (registration required).

Related: European Union Trade Policy and Geographical Indicators (European Commission)