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.

REGIONAL

Trump's first Asia tour
Media highlight personal chemistry with Asian leaders, but lack of real outcomes.

Regional media widely covered President Trump's 12-day, five-country Asia tour, in which he delivered two speeches outlining his "America First" trade policy and underlining his view of the Indo-Pacific. Trump's personal rapport with counterparts in Japan, South Korea, China and the Philippines was a key theme of coverage. While some media noted the chemistry will help set the tone for constructive bilateral working relationships, most also noted there were few tangible outcomes of the visit. Regional coverage also highlighted that while Trump was in Asia, other Asian nations moved forward on broad trade deals without the United States, namely the Trans-Pacific Partnership (TPP).

Another highlight of regional coverage was Trump's meeting with Chinese President Xi Jinping. During his visit to Beijing, Trump announced nearly US$250 billion worth of commercial deals and bilateral investments, primarily in energy, commodities and infrastructure. Chinese media praised it as one of the most fruitful visits of a United States head of state to China and highlighted China's increasing openness to foreign firms under President Xi. Asian media raised questions on the deal's substance and the U.S.-China relationship, noting the deal could indicate a softer U.S. approach to China. Japanese and Korean media continued to focus on the Trump Administration's aggressive approach to their own bilateral trade relationships as well as regional security issues.

Some Asian policy experts note Trump's focus on personal relationships showed his priorities in Asia are transactional, signaling he wants deals above all else. Analysts are also calling it a missed opportunity for the United States to reaffirm its commitment to the security and economic alliances in the region.

The Takeaway: President Trump's Asia visit left many in the region still questioning the future of U.S. engagement with Asia, especially as there is a major disconnect between Trump's "America First" policy and withdrawal from TPP, and the message that the United States wants to strengthen engagement with the region.

Sources: Channel News Asia, 11/18/17; South China Morning Post, 11/09/17; iFeng News, 11/10/17; The Straits Times, 11/06/17; Yonhap News Agency, 11/11/17; The Nikkei Asian Review, 11/29/17; Japan Today, 11/8/17; The Japan Times, 11/07/17; Yonhap News Agency, 31/10/17; The Jakarta Post, 11/30/17; The Sun Daily, 11/08/17; The Malay Mail Online, 11/10/17.

CHINA

China lowers tariffs on cheese  
Mixed sentiment on impact to the development of China's local industry.

Late last month, the Chinese government's Customs Tariff Commission released a statement announcing the reduction of tariffs on imported food and consumer goods, including dairy products, namely cheese and infant formula. Majority of reporting discusses how the policy will benefit local consumers and encourage the upgrading of Chinese industry due to greater competition from overseas. Reporting on the dairy industry focuses on how the resulting increase in foreign competition will impact local dairy companies. Reports note that though the melamine issue was almost a decade ago and the quality of Chinese dairy has improved dramatically, consumers still lack trust in domestic players and prefer imported dairy products. Other reporting focuses on the impact of the new policy to the future price of infant formula.

The Takeaway: The new policy has been generally well received among the Chinese public. As the policy is also expected to further boost cross-border e-commerce, foreign brands will be more exposed and open to risk.

Sources: Sohu, 11/09/17; China Dairy Industry, 11/28/17; iFeng Finance News, 11/24/17; Da Shijie, 11/28/17; Netease, 11/24/17.

China hosts infant formula innovation forum
Industry stakeholders discuss challenges facing the domestic market.

A key focus of the forum was how to promote the development of the domestic industry to boost the competitiveness of Chinese infant formula brands. The president of the China Dairy Industry Association asserted that though the quality of domestic Chinese infant formula has improved, consumers still prefer international brands which they can buy at relatively lower prices on cross-border e-commerce channels. The implementation of the infant formula registration policy is expected to speed up industry consolidation and enable a leading Chinese brand to emerge by pushing smaller companies out of the market. The deputy director of food registration within the Chinese government also pointed to the lack of standards for ingredients, labeling and advertising, which have allowed a flood of small brands to proliferate, as issues hindering the development of the domestic formula industry.

Sources: China Economic Daily, 11/15/17; China Economic Daily, 11/15/17; Yicai, 11/17/17.

JAPAN

Japan pushes to conclude EU and TPP trade talks ASAP
Government adopts measures to support domestic dairy and other agriculture sectors.

On the heels of President Trump's visit to Japan, media widely covered Japan's efforts to broaden its free trade network. Japan and the European Union are expected to finalize a free trade agreement this year. On November 9, the 11 remaining Trans-Pacific Partnership members reached a broad agreement on a revised deal without the United States. Japan's agricultural sector was a key theme of reporting on the trade talks. The Japanese government outlined a series of measures to strengthen the local farm industry, particularly dairy, from adverse effects from stronger competition once the trade agreements are implemented. The measures include allocating additional budget to support livestock farmers, as well as steps to improve the quality and reduce the production costs of domestic dairy products and raw milk. Reporting also indicates Japan views both deals as a bargaining chip in trade dialogue with the United States. Japanese Finance Minister Taro Aso reiterated that Japan would not enter a bilateral free trade agreement with the United States and would focus on economic dialogue to solve trade issues.

The Takeaway: It is clear from the breadth and focus of media coverage that protecting Japan's agriculture sector remains paramount.

Sources: The Asahi Shimbun, 11/08/17; Japan Today, 11/08/17; The Japan Times, 11/15/17; Nikkei Asian Review, 11/15/17; The Nikkei Asian Review, 11/18/17; The Japan Times, 11/24/17; The Japan News, 11/24/17; The Japan News, 11/27/17.

SOUTH KOREA

Korean farmers protest Korea-U.S. FTA renegotiation hearings
There are increased calls to protect Korean national interests.

As discussion continues regarding a possible renegotiation of the South Korea-U.S. Free Trade Agreement (KORUS FTA), there are increasing calls to protect local industries from concessions to the United States, particularly from the automotive and agricultural sectors. The farming industry's opposition to the negotiations has been particularly strong. Farmer protests have repeatedly disrupted KORUS FTA public hearings and farmer representatives have demanded the trade deal be scrapped and South Korea's top trade negotiator be dismissed. Media reports question the effectiveness of the South Korean safeguards on "protected and sensitive items" in the KORUS FTA, citing recent studies showing a sharp increase in imports of U.S. agricultural products, including powdered milk. The South Korean government has continued to express its firm stance towards additional U.S. calls to open its agricultural sector, with some senior officials noting scrapping the deal is also an option for South Korea and not just the United States. Many media outlets continue to report on studies assessing the potential impact of KORUS amendments to South Korea's economy. Media reports also note South Korea has urged the United States to consider the bigger strategic picture and not push too hard on the renegotiation of KORUS.

The Takeaway: South Koreans have a strong culture of activism and frequently protest. As agriculture is both a politically and a socially sensitive issue in Korea, it is not unusual to see farmers protesting the KORUS FTA.

Sources: Yonhap News Agency, 11/10/17; The Korea Herald, 11/10/17; The Korea Times, 11/17/17; The Hankyoreh, 11/18/17; KBS World Radio, 11/22/17; The Korea Times, 11/22/17; Yonhap News Agency, 11/22/17; The Hankyoreh, 11/23/17.

U.S. dairy farmers share expertise with Korean counterparts
Focus on introducing value-added, innovation to overcome slump in domestic market.

Korean media published an interview with founder of Fair Oaks Farm, Suzanne McCloskey, who came to South Korea to attend the U.S. Dairy Business & Innovation Conference organized by USDEC. The interview focuses on how innovation has helped Fair Oaks Farm overcome market challenges, particularly declines in fluid milk consumption, as well as decrease its environmental impact. The article notes that to cope with the domestic oversupply of milk, Korean dairy firms have tried to produce and market cheese, yogurt and other processed goods, but are unable to make a dent because many consumers choose imported dairy products from the United States, Australia and other countries.

Source: The Korea Times, 11/08/17.

MALAYSIA

Malaysia urges United States to return to TPP
Proposes bilateral free trade treaty just in case.

During a recent visit to the White House and with U.S. congressional members, Malaysian Prime Minister Najib Abdul Razak stressed the importance of U.S.-Malaysia bilateral relations and continued dialogue through the Trade and Investment Framework Agreement. While the prime minster encouraged the United States to return to the TPP, but if that fails to materialize, he also proposed a bilateral free trade treaty with the United States based on the TPP framework.

Sources: The Sun Daily, 10/30/2017; The Malaysian Insight, 10/30/17.

International animal welfare campaign gains local attention
Film shows "shocking" conditions on Italian dairy farms.

Malaysian media reprinted international news of a campaign by Compassion in World Farming pointing to poor animal conditions on Italian dairy farms. The campaign, #notonmypasta, aims to push producers of parmesan and Grana Padano to introduce welfare guidelines for their milk suppliers. According to the report, films of nine Italian dairy farms indicate animals were underweight and over-worked. A spokesperson from the consortium of producers of Parmigiano Reggiano confirmed that production specifications of the upmarket cheese did not cover animal welfare because "it is not something that has an impact, if not marginally, on the quality of the product."

The Takeaway: Generally, there is little awareness or concern for animal welfare in Asia. However, as Malaysia is focusing on elevating its own dairy sector, and Malaysian media are now paying attention to international activist groups, this topic could see more interest.

Source: The Malay Mail Online, 11/25/17.

New Zealand's Fonterra optimistic about Malaysia investments
Highlights Malaysia as key gateway for exports to other Asian countries.

Media report New Zealand daily manufacturer Fonterra Co-operative Group Ltd will continue to invest in Malaysia as a gateway for exports to other countries. In May 2017, Fonterra Brands Malaysia reopened its Susumas milk powder manufacturing, following a RM20 million (~USD4.8 million) upgrade, to boost its role as a manufacturing hub in Malaysia and the ASEAN region. According to Fonterra's spokesperson, half of the volume of New Zealand milk stops in Malaysian ports before reaching final destinations in Europe, Japan, China or Africa.

Source: New Straits Times, 11/11/17.

INDONESIA

Indonesian Trade Minister calls EU negative palm oil campaign a "Trade War"
Calls for action to disrupt imports of EU milk powder.

Indonesian media reporting focused on the growing government concern for Indonesia's palm oil industry, following the European Parliament's release of a report on the environmental impact of the commodity. Both Malaysia and Indonesia have agreed to counter European Union (EU) restrictions and requirements for the import of palm oil, which they claim are unfair, discriminatory, and negatively affect 18 million farmers in both countries. At the International Palm Oil Conference, Indonesian Trade Minister Enggartiasto Lukita equated the European Union's negative campaign against palm oil to a trade war, and called on Indonesian stakeholders to take action by disrupting import commodities from Europe. Lutika specifically targeted imports of European milk powder, which he claimed were harmful to the development of the domestic dairy industry.

The Takeaway: Indonesian government officials often speak impetuously, particularly on issues of national importance, such as palm oil. Singling out Europe's dairy industry is most likely an attempt to needle an EU industry with similar sensitivity and national significance.

Sources: Antara News, 11/03/17; The Jakarta Post, 11/03/17; The Jakarta Post, 11/20/17; The Jakarta Globe, 11/22/17; The Jakarta Post, 11/23/17.

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

###

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.