China is unilaterally lowering its tariffs on cheese imports from 12 percent to 8 percent in a broader package of tariff reductions on foods and consumer goods that went into effect on Dec. 1.
The U.S. Dairy Export Council says the lower tariffs will immediately boost the competitiveness of U.S. cheese exports and help U.S. suppliers take a larger role in meeting China’s booming cheese demand.
“We are very pleased with China’s decision because it will help U.S. cheese exporters and manufacturers chip away the tariff disadvantage with other competitors,” Tom Vilsack, USDEC president and chief executive officer, said in a press release.
Cheese was included in the tariff reductions because of three years of bridge-building efforts led by USDEC. Those efforts focus on working with Chinese authorities to analyze the mutual benefits that would flow from China unilaterally lowering its tariffs on certain dairy products.
USDEC has been focused on pursuing opportunities to address the competitive disadvantage faced by various U.S. dairy exports into China and other markets, said Shawna Morris, vice president of trade policy for USDEC.
The effort is broader than access to the cheese market in China, but this was an opportunity to make headway there and USDEC is very pleased by the step China chose to take, she told Capital Press.
“As this was a unilateral action, China clearly saw it as in its own benefit to make this change and thereby help to increase consumer choice options in China,” she said.
Over the last decade, China’s cheese imports soared more than seven-fold to nearly 100,000 metric tons. Already a Top 10 cheese buyer, it is on pace to become the largest cheese importer in the world in the coming years.
At the same time, U.S. suppliers have been losing market share, in part due to unfavorable tariff rates verses that of competitors, according to USDEC.
U.S. cheese exports to China in 2016 were 11,743 metric tons, valued at $38.2 million. That was down from 15,483 metric tons valued at $53.3 million in 2015, according to the USDA Foreign Agricultural Service.
U.S. market share on a value basis was 14 percent of China’s total cheese imports in 2016, down from the peak of 27 percent in 2012, Veronica Nigh, American Farm Bureau Federation economist, noted in this week’s AFBF Market Intel.
Oceania and the EU are the main competitors to U.S. dairy in China, Morris said.
The EU doesn’t have a free trade agreement with China, so it pays the same tariff rates as the U.S. But Australia and New Zealand have agreements with China that provide duty-free access on a certain quantity of their products and diminishing tariffs for various products, she said.
The U.S. remains at a disadvantage not only in China but in other countries when it comes to tariffs due to lack of U.S. free trade agreements, Jaime Castaneda, USDEC senior vice president of trade policy said in the press release.
“We are committed to finding ways to recoup that competitive disadvantage,” he said.