What is a 201 safeguard investigations?
Safeguard actions under Section 201 of the Trade Act of 1974 provide temporary relief to U.S. industries that are being harmed by increasing volumes of fairly traded products. Safeguards are different from antidumping (AD) and countervailing (CVD) duties, which are used to combat unfairly traded imports. The International Trade Commission (ITC) examines whether increased imports of the product are a “substantial cause” of “serious injury.” If the ITC decides they are, it recommends relief to the President, typically in the form of tariffs and/or quantitative restrictions, and the President can accept the ITC’s recommendation, modify it, or impose no relief at all.
How did the Blueberry 201 safeguard investigation start?
During the USMCA negotiations, certain U.S. growers sought a “seasonality” provision that would make it easier for them to bring AD/CVD cases against Mexico, but the provision was not included in the USMCA primarily due to concerns about retaliation by Mexico and Canada against U.S. agriculture exports. But the Trump Administration promised those growers it would take action to address their concerns. After virtual field hearings for mainly Florida and Georgia growers, USTR issued a report indicating it would request a global 201 safeguard action on imports of blueberries and commence an investigation into other products, including strawberries, bell peppers, cucumbers and squash, that could also lead to a 201 action. USTR submitted its Section 201 request on fresh, chilled, and frozen blueberries to the ITC on September 29, 2020. The ITC will decide on injury by the end of February. If it finds injury, the ITC will recommend relief to the President by the end of March, and the President will make a decision on relief by the end of May.
Do blueberry imports hurt domestic growers?
No. Imported blueberries actually help foster, rather than impede, the domestic blueberry industry. Demand for blueberries has increased more than 300% since 2005 because of their superfood qualities. The U.S. harvest, however, lasts only six months. The different growing seasons throughout the hemisphere permit North and South American blueberry growers to supply the product to the U.S. market year-round, increasing demand and growing the pie for all blueberry growers. The U.S. domestic industry has increased acreage thanks to the explosion in demand for the product. While imports have increased, so has domestic production.
So imported blueberries are good for the U.S. blueberry market?
Yes. Imported blueberries simply do not compete significantly with domestically grown blueberries. Imports enter the United States predominantly in September through March, with very little overlap with the U.S. harvest during the spring and summer. Moreover, imported blueberries are typically priced higher than domestic blueberries, so that U.S. blueberry prices increase when imports increase and decrease when imports decrease. A safeguard action would only hurt U.S. consumers by increasing the price of imports and decreasing the supply of blueberries without providing any real benefit to the domestic industry, which cannot replace imports. Reduced imports would also disrupt downstream blueberry distribution supply chains, jeopardizing well-paying U.S. jobs.
Why then are domestic growers asking for relief?
Domestic growers who favor relief have misdiagnosed their problems. Given the limited overlap between domestic and imported blueberries, it is evident that other factors are contributing to any harm U.S. growers have suffered. The evidence suggests that the harm is caused by factors other than the higher-priced imports, including weather problems in the Northeast, disease issues in the South, labor shortages in the U.S. generally, mistakes in choice of field location, and a failure to evolve with the varietals the market demands. COVID-19 challenges to the agriculture industry and safeguarding the health of essential workers is adding complexity to everyone involved. To the extent the Administration takes action to help domestic growers, it should focus on supporting technological advancements in the domestic industry so that domestic production becomes more resilient to climate factors and produce more desirable blueberry varietals.
But what’s the harm in providing some relief?
Canada, Chile and Mexico can and certainly will retaliate immediately against U.S. agriculture exports if the United States restricts their exports. Moreover, today it is blueberries. USTR has made clear that tomorrow it will be strawberries, the day after that bell peppers, and who knows what other product will follow thereafter. The ITC is already conducting a separate investigation into raspberries. If the blueberry investigation proceeds, it will likely trigger a cascade of separate investigations into other agricultural products that would further hurt U.S. consumers and relationships with U.S. allies, while provoking unnecessarily harmful retaliation against U.S. agriculture exports.