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Organic trade pacts are net positive for all parties

Staff writer |
Since 2009, the United States has entered into international accords with Canada, the European Union and major Asian trade partners to promote the trade of organic products. But have these arrangements lived up to their promise?

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A new report released by the Organic Trade Association shows these trade understandings have significantly boosted overseas business for U.S. organic.

In a relevant and timely study on the impacts of organic equivalency arrangements, these accords were found to have collectively increased annual U.S. organic exports by 58 percent during 2011-2014 over what exports would have been without any agreements in place.

Conducted by Dr. Edward Jaenicke, Associate Professor of Agricultural Economics at Penn State University, the study for the first time singles out organic equivalency policy to scientifically evaluate whether the policy is having its intended results.

The study looks at organic equivalency arrangements between the U.S. and Canada (implemented in 2009), the EU (2012), Japan (2014) and Taiwan (2009). The Taiwanese arrangement is a one-way understanding in which Taiwan recognizes U.S. organic certification.

Recent organic equivalency arrangements signed with South Korea (2014) and Switzerland (2015) were not included due to insufficient data.

The study focuses on the 2011-2014 period. The U.S. Department of Agriculture (USDA) tracks exports and imports for agricultural products with a special harmonized system trade code, known as an HS code. HS codes were first issued for organic in 2011, and there are now 34 export and 40 import codes for organic products.

Annual U.S. organic exports are estimated at $3.2 billion. Since the implementation of the trade equivalency arrangements, U.S. organic exports to the EU have risen by 44 percent, to Japan by 17 percent, and to Canada by 14 percent.

In dollar value, organic apples, lettuce, grapes, spinach and strawberries are the top five organic exports, and organic coffee and soybeans are the top organic imports.

Using the study's methodology, the report found that the Canadian equivalency arrangement has generated a 455 percent increase in annual organic exports to Canada over the level projected without a trade arrangement, and a 371 percent increase in organic imports from Canada.

With Japan, the equivalency policy was found to result in a 220 percent increase in U.S. organic exports to Japan and a 267 percent increase in annual imports. The one-way arrangement with Taiwan was estimated to generate a 211 percent increase in annual organic exports to Taiwan.

The study found a neutral impact on annual organic exports to the EU, and a 91 percent increase in imports of EU organic products.

Jaenicke explained the current HS codes only track single-ingredient items, so any value-added organic products like baby food, baking flours and snacks that are popular in the EU market are not included.

That fact, plus the existence of other trade barriers not associated with organic, dampened the study's outcome for the EU, he said.

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