Salty Issue in U.S.-European Trade Talks: Feta Cheese

Feta cheese is one of dozens of regional foods whose names the EU insists on reserving

KALAVRYTA, Greece—Negotiators meeting this week to forge a sweeping trade agreement between the U.S. and the European Union are nearing a deal to eliminate tariffs on at least 97% of goods traded across the Atlantic, officials close to the talks say, building momentum for what would be the most ambitious trade pact in more than 20 years.

But a host of disputes still stand in the way of an overall agreement, including an unlikely stumbling block: the salty white cheese called feta made for centuries in the rugged mountains of Greece.

In the EU, only cheese made from the milk of sheep and goats in swaths of mainland Greece and the island of Lesbos can be called feta. It is one of dozens of regional foods and drinks whose names the EU insists on reserving, in the face of stiff resistance from the U.S. food industry.

The problem is American companies also make products that use many of the names. Athenos feta, a U.S. brand from Kraft Foods Group Inc., isn’t made of the milk of sheep and goats grazing on wild grasses of Greek mountain pastures but from cow’s milk in Wisconsin.

“They call it feta. This is not right,” said Manos Kassalias, general manager of the Kalavryta Cooperative, which has made feta for decades. The difference is “day and night. The way of production, the kind of milk—it’s totally different.”

The European Union is pushing to reserve names like feta and other traditionally produced foods for products made only in Europe. But the proposal is facing stiff resistance from the U.S. food industry and posing challenges for an ambitious trade deal. Photo: Matthew Dalton/The Wall Street Journal

Economists say the trade deal would lift a broad range of industries, from auto makers to chemical companies. Supporters of a pact call it an “economic NATO” to mirror the military alliance, solidifying U.S.-European ties at a time of geopolitical threats from Russia and economic challenges from China.

If successful, the U.S.-EU talks would likely result in each side accepting the other’s auto-safety regulations. Car companies would save millions by no longer having to build different versions to meet two sets of safety rules.

U.S. and EU regulators also hope to end duplicative inspections of each other’s pharmaceutical plants. And though the EU has far stricter chemical regulations than the U.S., negotiators also want to make it possible for chemical companies to submit similar testing data to regulators on both sides of the Atlantic.

When U.S. and European leaders launched negotiations in 2013, they hoped for a preliminary agreement in 2015. Progress has been made. At negotiations in Brussels earlier this year, the sides exchanged offers to open domestic markets to foreign companies selling services such as telecommunications and insurance; afterward, chief U.S. negotiator Dan Mullaney said, “We’re closer together.” Even so, the sheer complexity of the talks has likely pushed a preliminary accord off to 2016 at least.

With talks on the 12-nation Trans-Pacific Partnership completed, a deal between the EU and the U.S. has become the Obama administration’s top trade priority. Covering a bigger share of global gross domestic product than the TPP, a U.S.-EU deal would create a vast, trans-Atlantic free-trade zone. Tariffs would fall almost to zero, and a host of regulations that hinder trade would be streamlined or eliminated.

There is opposition on both sides of the Atlantic from labor leaders and politicians worried that trade deals bolster the power of multinational companies to the detriment of wages, public health and environmental standards.

But the talks also face particular kitchen-table issues that cut deep into regional and national identity and affect powerful economic interests.

Washington, for example, wants the EU to ease curbs on imports of genetically modified crops and poultry washed with chlorine. And in one of the most contentious issues, the EU is determined to preserve the food-names rule, which it calls “geographical indication.”

“The increased protection of European geographical-indications food products is one of our key priorities,” said Daniel Rosario, a trade-policy spokesman for the European Commission. “These discussions are about the protection of European intellectual property…in the United States.”

The EU has succeeded in getting protections inserted into other trade deals, such as with South Korea, Mexico, Central American nations and, most recently, Canada. The agreements potentially block U.S. producers of products such as feta, Gorgonzola and Parma ham from exporting to those trade partners of the EU.

The EU’s stance has angered U.S. government officials, politicians and the U.S. food industry, which say many of the food names are generic and shouldn’t be reserved for goods from one region. Rep. Paul Ryan (R., Wis.), chairman of the House Ways and Means Committee, brandished a wedge of Gouda cheese at a hearing in January and urged U.S. trade representative Michael Froman to knock down the barriers to American exports. Gouda Holland is among food names the EU restricts.

European food producers see the area as one of their main interests in the trade talks. Last year, Italy exported around €1.35 billion ($1.53 billion) of products with geographical indications to the U.S., according to Italy’s main food-industry lobbying group, called Federalimentare.

The group estimates the North American market for “Italian-sounding” products is over €24 billion. “No consumer should be misled by a product that evokes Italy when it hasn’t been produced in Italy,” said Luigi Scordamaglia, president of Federalimentare.

In Greece, production of feta, which means “slice,” provides income to about 50,000 sheep and goat farmers.

In Kalavryta, a small town in the mountains of the Peloponnese, the Kalavryta Cooperative produces cheese from milk gathered from around 1,300 farmers. Feta has been made the same way in the region for hundreds of years, with a sprinkling of Greek sea salt and months of aging in wooden barrels.

Even so, Greece achieved protected status for the feta name only after a struggle in the EU, because cheese makers from some other European countries also produce white, brined cheese. In 2006 the European Court of Justice ruled that only Greeks could call theirs feta.

Particularly galling to Greek producers was an ad campaign Kraft rolled out for Athenos feta several years ago featuring a cranky old woman named YiaYia, Greek for grandmother. She “doesn’t approve of much, but she does approve of using Athenos” feta, said the ad, adding that it is “made the Greek way.”

Kraft didn’t respond to questions on the campaign or differences in production. But speaking generally of EU food-name limits, a spokesman said: “Such restrictions could not only be costly to food makers but also potentially confusing for consumers, if the labels of their favorite products using these generic names were required to change.”

The Greek government has taken a hard line on protections for the cheese in the EU’s most recent trade negotiations. It has threatened an effort to block the EU-Canada trade deal, which allows existing producers to continue using the name feta but forbids new producers to do so.

Though many farms in the Kalavryta region have been in the milk business for generations, some Greeks have turned to raising sheep and goats only in recent years, as the country’s economic crisis made it hard to make a living in other professions.

“The situation is difficult for Greece,” said Dionysius Vrachliotis, a ship engineer and carpenter who moved from Athens with his family over a year ago to raise sheep. “I think the future is these jobs,” he said, motioning to his hundreds of sheep.

Source:WSJ