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April 7, 2016

U.S. Dairy Export Council Endorses TPP Trade Deal

 |  By: Jim Dickrell

Following the lead of the National Milk Producer Federation, the U.S. Dairy Export Council today endorsed the Trans-Pacific Partnership trade agreement.

“The evaluation found that even though TPP fell well short of providing meaningful access to the highly-protected markets of Canada and Japan, the net effect of all market access concessions was neutral to slightly positive for U.S. dairy,” notes USDEC President Tom Suber. “But what ultimately tipped the scales in favor were the achievements obtained by U.S. negotiators to reduce non-tariff barriers to trade—sanitary and phytosanitary (SPS) measures and geographic indications (GIs)—and the potential for TPP to expand over time to include new participants.”

USDEC officials say TPP achieves “important improvements” in sanitary and phytosanitary (SPS) measures, particularly in the area of science and risk analysis, equivalence, import checks, transparency and mechanism to resolve SPS issues quickly.  They add that TPP’s geographical indications (GI) provisions break new ground by establishing a more equitable international model for GI registration, filling a void that the European Union (EU) has exploited to erect non-tariff trade barriers and limit competition from U.S. cheese suppliers.

The hope is that if TPP passes, other nations will join. Indonesia, the Philippines, Taiwan and Thailand have already expressed serious interest in joining TPP. All four are free trade agreement (FTA) partners with New Zealand and three are FTA partners with Australia, putting U.S. dairy suppliers at a competitive disadvantage. These four countries purchased $665 million in U.S. dairy products in 2015 but $1.7 billion from Australia and New Zealand.

“Our chief competitors not only enjoy a competitive advantage through existing FTAs, they are aggressively seeking to improve their edge by negotiating additional bilateral agreements,” Suber says. “And because we’ve entered a period of intensified competition globally, any FTA advantage gets magnified.”

The USDEC Board also passed a resolution officially voicing concern regarding the direction of the Transatlantic Trade and Investment Partnership (TTIP) talks between the United States and the European Union. What worries the USDEC Board is the Obama Administration’s push to finalize an agreement this year despite lack of any discernible progress on dairy SPS issues, GIs and tariffs.

“The U.S. dairy sector runs an annual $1-billion trade deficit with the EU in large part because we provide more favorable tariff and non-tariff market access to EU suppliers,” said Suber. “There are no indications that TTIP talks are proceeding in a manner that would help level the playing field and provide that same access to U.S. suppliers.”