These are now provided monthly by Edelman Shanghai as part of the news monitoring we do for issues and crisis management in Asia.

We are pleased to extend this information to our wider USDEC membership to serve as a quick and informative compilation of regional headlines and potential trends in Asia-Pacific, but more specifically over time to help build understanding of what's happening in these markets, as well as identify any formative issues.

REGION

Revised TPP Will Soon be Signed
Trump Thinking to Rejoin; Korea and Thailand Thinking to Join

The remaining 11 members of the former Trans-Pacific Partnership agreement have finalized a revised trade pact called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The pact is scheduled to be signed on March 8 in Chile. With the United States not participating in the pact, most media are discussing the cost-benefit breakdown for member countries based on the new text. However, controversial issues remain, with more than 20 provisions having already been suspended or revised before the official signing. Media also focused on U.S. intentions of rejoining the Trans-Pacific Partnership after President Trump indicated that the United States could join if allowed to negotiate more favorable terms.

Other countries within the region are now considering joining the "TPP 2.0." Thailand, Indonesia, South Korea, the Philippines, and Taiwan have all expressed interest in joining the 11-nation trade deal.

In early February, China repeated its sentiments towards the CPTPP. The spokesperson for the Ministry of Commerce of China said that China supports any trade deal that is compatible with the World Trade Organization, open, inclusive, transparent, advances globalization, promotes regional economic integration, and benefits the global community. China is actively working on a high-standard FTA network that is anchored in the region and complements the Belt and Road Initiative.

Sources: The Hill, 02/28/18; The Star Online, 02/22/18; The Straits Times, 02/27/18; Japan Times, 02/24/18; Ministry of Commerce, PRC, 02/02/18; Bangkok Post, 03/01/2018.

CHINA

Domestic Infant Formula Industry Welcomes Recovery

In 2017, China's domestic infant formula industry experienced rapid growth for the first time in three years. Meanwhile, foreign brands were frequently cited to have quality issues. Media emphasized that the Chinese infant formula market has experienced a comeback following the launch of the Infant Formula Registration Policy. However, foreign brands still control 52.6 percent of the dairy industry's market share, with domestic brands only accounting for 28.5 percent. Looking ahead, the infant formula industry is projected to experience fierce competition post-2020 due to China's declining birth rate.

Media also noted that imported infant formula will have a harder time accessing the Chinese market due to a thorough dairy quality safety supervision system. Imports now have to pass through 15 checkpoints in order to complete the importation process. Last year, China intercepted 35 batches (approximately 77 tons) of imported infant formula, including products from Australia, Switzerland and France.

The booming Chinese market has helped dairy giants like Danone see strong sales performance. The Paris-based company's sales of infant nutrition climbed almost 10 percent last year, fueled by growth in China and the rest of Asia. In the past five years, Danone has doubled its market share in Asia by striving to cut out the middleman and establishing direct sales to consumers.

Sources: Jiemian, 02/06/18; Finance.China, 02/28/18; NetEase Finance, 02/07/18; Sohu Finance, 02/09/18; CQN, 02/07/18.

Strict Regulation on Dairy Industry Continues

China continues to maintain strict regulations on the domestic dairy industry, especially regarding infant formula. Media also note the continued development of the domestic dairy industry, with brand building and intelligent manufacturing being considered key trends for future success. In addition, higher quality standards and stricter supervision on dairy production are becoming more commonplace. On February 20, the Ministry of Agriculture released a draft of national food safety standards for raw milk, pasteurized milk, sterilized milk and reconstituted milk. The MIIT reportedly plans to implement an industry standard infant formula traceability system in 2018, which will first be tested in three to five pilot enterprises.

On January 1, 2018, the Infant Formula Registration Policy and the new Food Safety Law fully came into force. Infant formula products, whether domestically manufactured or imported through general trade, must now obtain formula registration before they can be sold in the People's Republic of China.

Sources: CINIC, 01/30/18; Sohu Finance, 01/30/18; CNSTOCK, 01/30/18; Sina Finance, 01/31/18; Yicai, 02/21/18.

British Beef and Dairy Return to China After 22 Years
China will "open wider to the U.K."

Upon British Prime Minister Theresa May's state visit, China promised to increase its trade with the United Kingdom. Chinese President Xi Jinping stated that China's markets would be further opened to the U.K., while May revealed U.K. beef would return to Chinese dinner plates and supermarket fridges for the first time since the 1996 BSE crisis. Flanked by Chinese premier Li Keqiang, May said: "We have agreed to new measures that will improve market access in China and remove barriers to trade. This includes an agreement to make progress on lifting the BSE ban on British beef exports within six months, and an agreement to allow exports of a broader range of products from the U.K. to China including beef, dairy, and other food products."

Li Keqiang told a press conference that both countries were "committed to upholding free trade and promoting economic globalization."

Sources: BBC, 02/01/2018; Mirror, 01/31/2018.

JAPAN

Japan Steel Industry Wants to be Excluded from U.S. Import Curbs

Japan's steel industry representatives are reported to be voicing concerns over the U.S. Commerce Department's proposal to impose new tariffs on steel and aluminum imports—and those concerns did come true on March 1 when President Trump announced that he is planning to initiate a 25 percent tariff on steel and a 10 percent tariff on aluminum. Despite rising tensions in bilateral trade and the U.S. orientation towards protectionism being in the news cycle, Japanese media gave particular attention to the industry protest over the United States' actions. Japanese media identified China as the key target of U.S. trade policy, and noted that China's Commerce Ministry warned that any action that affects its interests would meet retaliation.

Sources: Japan Toady, 02/28/18; Reuters, 02/19/18; Japan Toady, 02/17/18; Asia Times, 02/20/18; Japan Times, 02/20/18.

SOUTH KOREA

Self-Sufficiency in Dairy Foods Falls

South Korea's self-sufficiency rate for grain, beef, and seafood fell dramatically last year, as imported items appealed more to consumer tastes due their lower pricing and variety. Specifically, South Korea's dairy imports exceeded local production for the first time, with dairy foods' self-sufficiency rate falling to 48.9 percent in 2017. Industry officials said the falling numbers were due to the declining consumption of milk, partly due to fewer newborns, and that consumers accustomed to westernized food look for cheese, butter, cream and other dairy products from imported brands.

Sources: YonHapnews, 02/07/18; Financial Tribune, 02/06/18.

South Korea Reacts to U.S. Anti-dumping Duties

South Korea plans to take a dispute to the World Trade Organization in the face of rising U.S. anti-dumping duties on its washers and solar panels. A complaint has already been filed. Media noted the U.S. imposition on South Korea followed the implementation of the Adverse Facts Available (AFA) provision in May 2016. The provision imposed anti-dumping duties on Korean steel products and transformers of up to 60.81 percent. The United States is again using the free trade agreement on tariffs and quotas to protect American manufacturers, an action strongly criticized as "trade protectionism."

Sources: Reuters, 02/20/18; HANKYOREH, 02/20/18; CNBC,2/20/18; YonHapnews, 02/19/18; Asia.Nikkei, 02/14/18.

MALAYSIA

Malaysia Claims United States is "Wrong" to Import Tariffs

The Malaysian Iron and Steel Industry Federation (MISIF) stated that the U.S. inclusion of Malaysia among the steel-exporting countries to face at least a 53 percent import tariff on all steel exports was "wrong." The MSIF claimed that Malaysia did not cause any injury to the U.S. economy, pointing out that the country only exports 96,000 tons of steel annually. Though the recent tariffs on Malaysia only target specific products, media note it could be harmful if tariff imposition broadens to other areas as Malaysia is heavily reliant on trade with the United States.

Sources: The Sun Daily, 02/22/18; Lexology, 02/20/18.

INDONESIA

Indonesia Added to U.S. Trade Hit List

Indonesia joined the U.S. trade list of countries to have anti-dumping and countervailing duties imposed on biodiesel by the U.S. Commerce Department. This action will likely price Indonesian biodiesel out of the U.S. market. In response, Indonesia is preparing to challenge it at the World Trade Organization. Media heavily focused on the United States' increasingly anti-globalization and protectionist behavior, mentioning its placement on the list as an abuse of the trade remedy laws.

Sources: Asia.Nikkei, 02/22/18; Reuters, 02/23/18; The Jakarta Post, 02/23/18.

Margaret Speich is senior vice president of strategic and industry communications at the U.S. Dairy Export Council. 

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The U.S. Dairy Export Council fosters collaborative industry partnerships with processors, trading companies and others to enhance global demand for U.S. dairy products and ingredients. USDEC is primarily supported by Dairy Management Inc. through the dairy farmer checkoff. The password-protected article above is intended for USDEC member organizations only and should not be shared with anyone outside your organization.