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Food & Ag Policy Briefing: Pressure builds on FDA over CBD, US-Japan trade deal, CAP transition

CBD company access to finance support eased, agri-food exports to benefit from Japan accord, talks have taken place over delay to new CAP implementation

The U.S. Food and Drug Administration (FDA) is coming under increasing pressure to be more proactive in establishing a clear regulatory framework for cannabidiol (CBD) foods and supplements – but law makers and industry stake holders appear divided on the next steps.

Senate appropriators recently agreed to provide FDA with $2 million for its CBD activities and included language in the agency's spending bill calling for it to issue an enforcement discretion policy within 120 days.

But the provision lacks specific instructions on how quickly the agency should develop regulations for the sector, which has frustrated the Natural Products Association industry group.

"Our concern is that nothing in the Senate’s proposal does anything to require the FDA to actually do anything to address the problem, or provide consumers with any clarity on what constitutes a safe level of CBD consumption," said NPA President and CEO Daniel Fabricant. 

Fabricant says the House has a more proactive approach. The House appropriations bill earmarks $100,000 for the agency to evaluate the safety of CBD use in foods and supplements and to set a safe daily use level.

"It’s great that both the House and Senate are looking at this issue, but the House version is better because it actually instructs the FDA to take action," Fabricant told IEG Policy. "Enforcement discretion is going to codify what the FDA is basically already doing, which simply isn’t enough."

But other stakeholders have praised the call for enforcement discretion as part of a strategy for FDA to get a handle on the rapidly growing market for CBD products.

Banking services

The U.S. Hemp Roundtable contends the Senate provision will "in the short run" reduce regulatory uncertainty that has hampered the ability of hemp growers and CBD companies to access financial support and banking services.

That cause was helped by a marijuana reform bill passed by the House last Wednesday (September 25). Amendments to the "Secure and Fair Enforcement Banking Act" (H.R. 1595) clarify a "safe harbor" for hemp financial transactions and call on federal banking regulators to issue guidance to financial institutions about the legality of hemp and businesses that sell hemp-derived products within 90 days.

The language also calls on federal regulators to provide "recommended best practices for financial institutions to follow when providing financial services and merchant processing services to businesses involved in the sale of hemp, hemp-derived CBD products and other hemp-derived cannabinoid products."

The lack of access to banking services is "an invitation" to theft, money laundering and tax evasion that is stifling economic opportunities, said Rep. Earl Blumenauer (D-Ore.).

"This is an $11 billion industry and growing. We need to step up and solve one of the biggest problems – and that is simply they don't have access to banking services," he said.

US-Japan deal

An initial agreement on a US-Japan trade agreement was unveiled last week, with some key components for agriculture.

Japan has committed to providing “substantial market access to American food and agricultural products by eliminating tariffs, enacting meaningful tariff reductions or allowing a specific quantity of imports at a low duty (generally zero),” the Office of the US Trade Representative (USTR) said.

Japanese tariffs will now be significantly lower or eliminated entirely for US beef, pork, wheat, cheese, corn, wine and so much more, US President Donald Trump affirmed in a statement.

Tariffs will be reduced in stages for fresh and frozen beef and fresh and frozen pork, trade worth about $2.9 billion, USTR said. Tariffs will be eliminated on more than $1.3 billion in products, USTR said, including almonds, blueberries, cranberries, walnuts, sweet corn, grain sorghum, food supplements and more.

Staged tariff eliminations will take place on another $3 billion in products such as wine, ethanol, frozen poultry, cheese and whey, processed pork, beef offal, frozen potatoes, oranges, egg products, and tomato paste.

Another series of products will be covered by country specific quotas (CSQs), providing access for specified quantities of those products at a preferential tariff rate, generally zero, USTR stated. Those products include wheat, wheat products, malt, glucose, fructose, corn starch, potato starch, and inulin.

Plus, US wheat and barley exports to Japan will “benefit from a reduction to Japan’s ‘mark up’ on those products, exports that were valued at more than $800 million in 2018.

CAP transition

In the EU, it has emerged that while efforts are still being made by the institutions to reach a deal on the next Common Agricultural Policy before the end of 2019, preparations have already started to extend the current CAP by a year.

The European Commission confirmed on Tuesday (September 24) that talks have been held on a possible 12-month extension between Agriculture Commissioner Phil Hogan and Budget Commissioner Günther Oettinger to decide at what time the transitional regulation should be published.

The next CAP is scheduled to be implemented in January 2021 but slow progress in reform negotiations has led to the need for serious consideration of temporary arrangements to ensure that there is no disruption to farmer support.

Hogan still hopes that an agreement on both the new farming policy and the EU budget can be reached by the end of the year, saying that the calendar is “converging towards December”.

French Agriculture Minister Didier Guillaume told IEG Policy at the informal meeting of EU agriculture ministers in Helsinki last week that he thinks it is still possible for a budget deal to be reached before the end of this year, but even if this is achieved it is “absolutely certain” that there will be a delay in the implementation of the next CAP of “at least one year” and possibly up to three years.

BPA appeal rejected

Finally, the EU’s General Court has refused to annul a European Chemicals Agency (ECHA) decision to list Bisphenol A (BPA) as an endocrine disrupting chemical (EDC), throwing out a challenge by industry association, PlasticsEurope.

PlasticsEurope claimed that ECHA had not followed the correct procedures when adding BPA to the candidate list of substances of very high concern (SVHC) under the 2006 REACH chemicals regulation in January 2017 as toxic for reproduction.

It also said producers had been denied their right to legal certainty among a string of specific pleas, but they were all rejected by the General Court’s ruling.

The Court confirmed that ECHA was also right to place BPA on that list because of its endocrine disrupting properties for humans.  An EDC classification is wider than toxic for reproduction as it can affect the whole hormonal system and therefore may cause cancer and other development, in particular neurodevelopment issues.

The listing – and ruling upholding that listing - is significant because few EDCs are listed as SVHCs. BPA is one of the first chemicals that has been identified as EDC by scientists, so it is important that it is recognized as such legally.

Next Generation Food

IEG Policy subscribers can now download a new special report titled ‘Next Generation Food: How health, climate change and politics are changing the way we eat’.

It looks at how the relationship people have with the food and drink they consume is going through a period of fundamental and rapid change, presenting opportunities and challenges for industry and policy makers alike.

The report explores themes such as obesity and nutrition, the rise of veganism, CBD products, environmental concerns and allergies.

Head to the Resources> Reports section in the left hand menu to get your copy.

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