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Idaho dairy interests push fairness in trade talks

Published on March 13, 2013 3:01AM

Last changed on April 12, 2013 11:07AM


Capital Press

The Idaho Dairymen's Association and Glanbia Foods, Inc., want U.S. negotiators to strike agreements that are fair to U.S. dairy farmers in the Trans-Pacific Partnership (TPP).

At the forefront of their concerns is the inability to get U.S. dairy exports into Canada and the potential that more U.S. dairy markets will be opened to New Zealand.

IDA and Glanbia say Canada and New Zealand, two of the 11 countries involved in the ongoing trade talks, have tightly-controlled dairy markets.

Bob Naerebout, IDA executive director, said there is huge opportunity for Idaho and U.S. dairy in Canada, but Canada's protectionist system has kept its markets closed to U.S. dairy products.

Canada has longstanding quotas on domestic production, stiff import tariffs and restrictions on the use of imported dairy ingredients, he said.

Canada joined the TPP trade talks last summer, but the concern is whether the country will stay at the table when it comes to dairy, he said.

On the other side of the coin is New Zealand, where Fonterra, a dairy co-op, controls 90 percent of the country's milk supply. New Zealand has significant opportunity and advantage if it gains unfettered access to U.S. markets and U.S. trade partners' markets, he said.

Because of Fonterra's market power, it can lower dairy prices to move more product, said Mike Brown, dairy economist with Glanbia Foods.

Fonterra can undercut prices and dump product into foreign markets because New Zealand's government allows the company to control the majority of milk production. That allows New Zealand to control markets, he said.

"It's not evil, but it is a sanctioned advantage," he said.

U.S. Dairy Export Council and National Milk Producers Federation have opposed any inclusion of dairy in negotiations with New Zealand unless practices they say are anti-competitive are addressed. Those groups, along with International Dairy Foods Association have also insisted that Canadian trade barriers must be eliminated.

The biggest opportunity for Idaho and U.S. dairy is in Canada. But, Brown said, restrictions there are even tighter than in Europe, and Canada wants to exempt dairy from the trade negotiations.

U.S. dairy basically gained tariff-free trade with Mexico through NAFTA, but Canada remained very restricted for U.S. dairy.

If New Zealand is successful in the TPP, it will gain free access to Mexico, displacing some U.S. exports. The U.S. needs access to Canada to help balance its losses in Mexico, he said.

IDA and Glanbia are OK with New Zealand and other countries having free access to Mexico as long as the U.S. has free access to Canada. The U.S. cannot allow Canada to exempt dairy again, he said.

"We think that market should be open and think it's important TPP recognizes this," he said.

Without access to Canada, the TPP wouldn't be worth doing for U.S. dairy, he said.

The 16th round of the TPP trade talks wraps up in Singapore on Wednesday.


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