Tom Vilsack, president and CEO of U.S. Dairy Export Council.
February 27, 2018

Trade with Mexico Accounts for Billions in Dairy Exports and Economic Output

 |  By: Jim Dickrell

A new study by Informa Economics shows that the U.S. exported $1.2 billion in dairy products to Mexico in 2016, a six-fold increase since 2002.

In 2016, Mexico accounted for 45% of U.S. skim milk powder exports, 30% of cheese exports, 10% of butter exports and 8% of whey exports.

Over the last five years, the U.S. has sold $6.7 billion in dairy products to Mexico. Those exports also accounted for more than $23 billion in economic output in the United States, and created nearly 16,500 full-time equivalent jobs.

“This analysis not only illustrates the importance of preserving existing market access to Mexico under North American Free Trade Agreement (NAFTA), but also demonstrates why we are urgently pursuing new opportunities via U.S. free trade agreements around the globe,” says U.S. Dairy Export Council (USDEC) President and CEO Tom Vilsack. “Virtually every U.S. free trade agreement to date has yielded positive results for dairy, and current negotiations hold great potential for the industry.”

The authors of the analysis note that under NAFTA, U.S. exports of dairy products to Mexico are duty free. This provides a significant advantage to the United States because export competitors shipping to Mexico are subject to MFN (most-favored nation) tariff rates of 20-45% on cheese, 45% on skim milk powder and 10% on whey products.

The analysis notes that while transportation advantages will continue with or without NAFTA, these logistical advantages would, at best, only partially offset economic losses in terms of business sales, GDP and jobs.  “Without NAFTA, the United States would be paying higher tariffs in terms of MFN tariff rates of 20 to 45%, or the same levels as its competitors,” the authors wrote.

“As this analysis shows, the relationship between the U.S. and Mexican dairy sectors is of great importance, not just to our producers, but to our economy as a whole,” says Jim Mulhern, president and CEO of the National Milk Producers Federation (NMPF). “We are committed to working toward a modernized NAFTA agreement that preserves this open and dependable trade relationship with Mexico, while removing massive barriers to dairy trade with Canada that were not adequately addressed in the original agreement.”

Note: The Informa Economics study was commissioned by USDEC.