Summary of Testimony: USTR Meeting
U.S. International Trade Commission
Washington, DC
May 15, 2019
Office of the U.S. Trade Representative
Docket No. USTR-2019-0003
Good afternoon. My name is Phil Kafarakis and I am the president of the Specialty Food Association. I would like to thank the U.S. Trade Representative for the opportunity to present the viewpoints of the specialty food industry at today’s public hearing.
The Specialty Food Association and Industry
The Specialty Food Association (SFA) is the trade association for all segments of the specialty food industry. The 3,800 plus SFA members – mostly small and very small food manufacturers, importers, distributors and retailers – are located throughout the U.S. They make and handle food products that are often referred to as “value added” or specialty. Specialty food sales in the U.S. are $140+ billion annually, according to research from Mintel International. Specialty foods represent 15% of all food sales at retail and are growing at a rate seven times that of mass market foods.
SFA sponsors the Summer and Winter Fancy Food Shows and education programs in San Francisco and New York, publishes Specialty Food Magazine and industry reports for members, and co-publishes with Mintel the annual State of the Specialty Food Industry Report.
Specialty food manufacturers and retailers value their positive relationship with their customers, many of whom are strong proponents of consumer choice in food. International foods along with local products are the backbone of their product offerings. This innovative mix of foods sourced both globally and locally is why specialty foods are growing in sales and are shaping the future of food.
Small Food Companies Will Be Harmed
The added 100% ad valorem import duties on specialty foods from Europe, especially cheese, olive oil, jams and other processed food products, will directly impact small food retailers around the country. These SME’s – small- and medium-sized enterprises -- are the engine that drive the specialty food industry. Given their effect on small food businesses, the proposed tariffs would not be “appropriate and feasible” in this industrial trade dispute. Specialty Food Association estimates that there are approximately 14,000 specialty food retailers across the U.S. which would be impacted by these tariffs.
Many of the processed foods listed by USTR are specialty foods, such as cheeses, olives, olive oil, processed fruits, nuts and juices. In fact, cheese is the highest volume product in specialty foods, with annual sales in excess of $4.2 billion. These foods are sold by small retailers who distinguish themselves in part by their selection and mix of high quality and trending foods, often combining domestic and imported foods. The proposed increased duties on specialty food products will have an adverse effect on U.S. small food businesses, decreasing sales and adversely affecting employment. A store with fewer specialty food imports or with only domestic specialty foods will be less attractive to consumers, resulting in fewer sales and less income for the retailers and their distributors. The harm will be seen in the reduced product selection at retail as well as in higher prices.
This business format and the possible negative effect of the proposed tariffs on this successful small business strategy will be explained in more detail in SFA’s May 28 written statement.
Increased Tariffs on Specialty Food Imports Would Not Be “Appropriate and Feasible”
Processed food products should be excluded from the product list attached to the Federal Register Notice - especially given the industrial nature of this long standing dispute, the many valuable industrial imports that could be substituted, and the likelihood that the European Union might respond by placing EU tariffs on the very processed food products that U.S. specialty food exporters (also SMEs and SFA members) are beginning to sell in the EU market.
The Specialty Food Association has been working with the Foreign Agricultural Service for the past 18 years to promote the export of value-added foods and has been very successful in building sales in Europe, especially in Germany, France, and the Netherlands. European consumers can now buy salsa from Texas, avocado oil from California, and cheese from Wisconsin in many retail outlets. It has taken many years for these small businesses to expand their export sales and retaliatory tariffs would be devastating. These businesses should not be sacrificed in a dispute about (and between) competing global transport companies. Putting small food companies and the specialty foods they manufacture and retail at risk is not “appropriate and feasible”.
CONCLUSION
The Specialty Food Association thanks the U.S. Trade Representative for this opportunity to testify and will present a written statement by May 28. It will state why the proposed tariffs are not appropriate and feasible in general and would be especially harmful to the nationwide network of small- and medium-sized food businesses that sell domestic and imported specialty foods to a growing consumer base.
from Specialty Food News http://bit.ly/2JmENiT
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