By CAROL RYAN DUMAS
Testifying at a Senate Finance Committee hearing on the Trans Pacific Partnership being negotiated between 11 countries, the U.S. Dairy Export Council gave its support to the agreement but only if it produces a positive outcome for U.S. dairy.
USDEC has four key factors that must be included in negotiations and resolved or it will have no choice but to oppose the agreement, USDEC President Tom Suber said during the April 24 hearing.
Those factors include open access to markets in Canada and Japan; reform of excess market concentration in New Zealand; high-quality and enforceable sanitary and phytosanitary measures; and the protection of common food names.
Resolving those issues would substantially enhance U.S. growth potential and the future strength of the U.S. dairy industry, Suber said.
Each element is important in securing a positive outcome for U.S. dairy. Gains in one area do not negate the importance of results in another, he said.
In addition, the U.S. dairy industry will reject any agreement that provides New Zealand unfettered access to U.S. markets without changes to New Zealand's dairy industry structure and without the U.S. gaining full access to Canada, he said.
New Zealand's government policies have allowed one dairy company to control 90 percent of the county's milk production and more than one-third of the global market, hindering fair competition and undermining U.S. export efforts, he said.
"It is simply inappropriate to provide new access to New Zealand without addressing the excessive level of market concentration resulting from these government preferences," he said
Suber cited calculations by National Milk Producers Federation, saying that without major reforms in New Zealand and the lack of other offsetting market access for the U.S. in TPP, open dairy trade between U.S. and New Zealand would cost the U.S. industry $20 billion over the first decade of the agreement.
Any broadening of New Zealand's access to U.S. markets makes it critical for the U.S. to have open access to other dairy markets, especially Canada and Japan, with the largest opportunity by far in Canada, he said.
Despite exorbitant tariffs and many nontariff measures, Canada is the second-largest export market for the U.S., but it continually tries to hinder imports from the U.S., he said. It is important to use TPP to remove prohibitively high tariffs and ensure that access is not restricted through nontariff barriers, he said.
Japan is the fifth largest export market for the U.S., but its tariffs are also high and regulatory requirements on many dairy products are cumbersome. Opportunity exists for additional U.S. exports there, but the U.S. would also face stiffer competition from TPP partners in Oceania, he said.
Prospects for a positive outcome for U.S. dairy rests in great part on how dairy negotiations with Canada and Japan are handled, he said.
"USDEC and others will strongly reject an outcome in TPP whereby the U.S. industry is asked to accept negative net trade impacts with respect to other major dairy producing countries while omitting obvious export gains in other markets," he said.
USDEC also wants enforceable sanitary and phytosanitary measures to prevent nontariff barriers to U.S. dairy products and the protection of common food names so the U.S. can sell those products into TPP countries.
The TPP is being negotiated among the United States, Australia, Chile, Malaysia, Singapore, Peru, Brunei, Vietnam, New Zealand, Canada and Japan. The 17th round of negotiations takes place May 15-24 in Lima, Peru.
USDEC's priorities for TPP talks
* Open access for U.S. dairy products in Canada and Japan
* Reform of excess market concentration in New Zealand
* High quality and enforceable sanitary and phytosanitary measures
* Preservation of common foods names, such as parmesan and feta