The USITC report on Competition between U.S. and ‘Major Foreign Supplier Industries,’ notably the EU, provides a wealth of information, although for serious researchers it would have been more helpful if the vast majority of this information had not been sourced from telephone calls and emails with unnamed interlocutors. Similarly, it takes little note of either major legislative changes in the EU that will take full effect by the end of 2014, or the rise of what may well prove to be a major supplier to the world market, namely India, who, with the help of Israeli investment and technology and low labor costs is slated to put its oil on the market for the first time in the coming season.
As is often the case with government reports, one hand is paying no attention to what the other hand is doing. This Report needs to be read with the backdrop of the ongoing negotiations between the US and the EU, set to resume for a second session next week, towards a Transatlantic Trade and Investment Partnership.
Cries for government help after a wrong-footed and highly speculative investment
Central to US goals in these negotiations are: widespread deregulation; institutionalization of corporate lawsuits against states that take legislative actions that have the possibility of reducing profits of foreign investors, and minimization of the effects of the EU system of protecting registered designations of origin (PDO’s).
Labyrinthine legislative proposals like those suggested in the Report (which some see as cries for government help after a wrong-footed and highly speculative investment) will only expose a hypocrisy that cannot but weaken the US position in those negotiations. In fact, a report on growth and jobs issued jointly by the EU and the US earlier this year talks specifically about reducing “redundant and burdensome testing and certification requirements.”
What the USITC Report does elucidate is the fundamental difference between California producers, who reportedly have borrowed large sums of money in order to render what is essentially gentlemen farming profitable by emitting plaintive cries for the iconic “level playing field,” and traditional European producers — by and large small landowners to whom bank loans are often unavailable, and who have often been producing for generations. Like many agricultural sectors across Europe, these farmers rely on EU funds to maintain their livelihood, support rural development, ensure food security and protect the land against erosion. These are not goals that the EU will, or can, abandon.
Notable for its absence in the Report are the extensive legislative measures that the EU has taken over the past three years to ensure the quality, purity and traceability of its olive oils. These measures will be enforced at the national level and their prime beneficiaries will be producers of high quality oil. Consumers will be made aware through prominent labeling that “Bottled in Italy” is no indication of Italian contents as all geographical sources must now be indicated. These measures have already enabled extra virgin producers in Greece and Spain — for the first time — and Italy (whose high-end producers suffered from the effects of low prices for blended oil) to market their oils directly to local and emerging markets instead of feeding surreptitiously into the mass-market Italian (and American) bottling industry.
Further, relying on the “Australian model” and its pleas for further testing and regulation, will not serve Californian producers well. For while the report indicates that imports have fallen with the rise of Australian buy local campaigns it fails to note that, according to 2013 USDA figures, the overall consumption growth rate in that country has been falling steadily since 2009 (when it jumped from zero in 2008 to 10 percent, after having a negative growth rate of 7 percent in 2007). Similarly, it has been reported that Australians are growing tired of expensive local “boutique” oils and are returning to supermarket brands. The “buy local” movement is not without controversy and food fads are real.
The report relies on the bromide that runs through much of what constitutes national discourse these days: the enemy is foreign. It strongly suggests that California could win over what is admittedly an East Coast consumer base if only foreign competition operated under “free market” principles. Like former US Secretary of Labor Robert Reich summed up in his blog recently: “If some people [i.e. European growers] aren’t paid enough to live on, the market has determined they aren’t worth enough.”) In fact, a much more realistic target for the domestic healthy up-market olive oil industry would be chemical-laden (domestically produced) prepared salad dressing. Instead of striving to educate the consumer on oil chemistry and human physiology (n.b., it isn’t going to happen), the simple slogan of “Read the labels and then decide” might work miracles.
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