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US cheddar cheese in Europe's trade mousetrap

US cheddar cheese in Europe's trade mousetrap
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If a solution isn’t reached soon in civil aircraft, the European Union (EU) will slap tariffs on U.S. exports for Boeing subsidies. The EU “hit list” identifies U.S. exports that could face up to 100 percent tariffs. Most of the goods on this list make sense, like almonds, which has hefty political influence in the U.S. House of Representatives. But one good looks out of place: cheddar cheese.

When a country retaliates with the approval of the World Trade Organization (WTO), as Europe will be doing, it generally targets exports that have electoral clout. In past cases, the EU has gone after goods made in “swing” states, for example, or the products of industries that are big employers. The logic is that these industries are more likely to be heard when they lobby for the U.S. to comply with a WTO ruling, looking to end the retaliatory tariffs. 

In this regard, cheddar makes little sense at first blush. Sure, U.S. cheddar is largely from Wisconsin, a swing state, but almost none of it is exported to Europe. This means the EU is not threatening to hit any real trade. So why list cheddar?

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It’s actually very provocative. Europe is drawing attention to the word cheddar. The U.S. produces three billion pounds of cheddar annually, but Europe argues that cheddar is part of a geographical indication (GI) called “West Country Farmhouse Cheddar,” a name the United Kingdom claims is its intellectual property.

Cheddar cheese dates back to at least the 15th century. The story is that the cheese was stored in caves in the cheddar region of England, hence the name. The UK definition of cheddar speaks to a specific process of cheesemaking, but the milk “predominantly” comes from Dorset, Somerset, Devon and Cornwall, and also from Gloucestershire and Wiltshire when the supply of milk falls short. That’s why the EU, both inside Europe and in third markets through many of its trade deals, lists “West Country Farmhouse Cheddar” as the UK’s geographical indication (GI), a type of intellectual property.

Wisconsin cheddar is some of the best, and it isn’t labeled as “West Country Farmhouse Cheddar.” But the issue is whether cheddar is a “common food name,” detached from a region in the UK, or whether the word itself means “West Country Farmhouse Cheddar.”

The plot thickens. Cheddar is a small part of a much bigger fight over names such as feta and parmesan. Countless other food names are in play. Tom VilsackThomas James VilsackUSDA: Farm-to-school programs help schools serve healthier meals OVERNIGHT MONEY: House poised to pass debt-ceiling bill MORE, CEO of the US Dairy Export Council, explains that “Europe has disadvantaged the US dairy industry for too long by abusing geographical indications (GI) policies.”

So, what’s at stake?

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Well, not the EU market itself. Europe doesn’t really import cheese. When it does, 87 percent of its imports come from Switzerland. Add in New Zealand and Norway, and you’ve got 94 percent of the cheese that Europe buys from the rest of the world.

This means the fight over cheddar is really about third markets. Europe has 44 trade deals in force, and it protects many cheese names in most of these, not the least of which is “West Country Farmhouse Cheddar.” In the EU-Canada Comprehensive Economic and Trade Agreement, for example, Europe lays claim to no fewer than 168 GIs, 57 of which are cheese names. The EU-Japan bilateral has 72 GIs, including 25 cheese names, one of which is “West Country Farmhouse Cheddar.”

No one in Wisconsin is exporting something called “West Country Farmhouse Cheddar.” The issue is whether it’s fair game for the U.S. to export something called Wisconsin cheddar. In turn, this depends on whether anyone knows that cheddar is a region, or whether cheddar is now just a common food name. The same goes for parmesan, feta, gruyere, gorgonzola and asiago.

The US recently won a legal fight against gruyere cheese. Swiss producers claimed that gruyere was theirs and asked that any U.S. producers use the name “Alpine cheese.” One thing that tripped up Switzerland’s case is that France is a big producer of gruyere, undermining Swiss claims that the quality of the cheese owes to the region. Feta? Actually, Denmark makes more of it than Greece. Gorgonzola and asiago? Both names are embroiled in trademark litigation

In July, 61 senators asked U.S. Trade Representative Robert LighthizerRobert (Bob) Emmet LighthizerWhiskey, workers and friends caught in the trade dispute crossfire GOP senator warns quick vote on new NAFTA would be 'huge mistake' Pelosi casts doubt on USMCA deal in 2019 MORE and Secretary of Agriculture Sonny PerdueGeorge (Sonny) Ervin PerdueTrump administration races to finish environmental rules, actions OVERNIGHT ENERGY: Barrasso to seek top spot on Energy and Natural Resources Committee | Forest Service finalizes rule weakening environmental review of its projects | Biden to enlist Agriculture, Transportation agencies in climate fight Forest Service finalizes rule weakening environmental review of its projects MORE to negotiate “concrete market access assurances regarding specific common food names … including those of importance to cheese….” The letter was written in reference to the United States-Mexico-Canada Agreement, but Europe is the real target, not least because it has trade deals with both Canada and Mexico. 

Think about that. The U.S.-EU civil aircraft dispute may soon trigger tariffs on a cheese that Europe doesn’t import from the U.S., but believes American producers unfairly exploit as one of many food names that it protects as its intellectual property across much of the world. It’s U.S. cheddar cheese in Europe’s trade mousetrap.

Marc L. Busch is the Karl F. Landegger Professor of International Business Diplomacy at the Walsh School of Foreign Service, Georgetown University, a nonresident Senior Fellow at the Atlantic Council, and host of the podcast TradeCraft.