June 1, 2016

Three Reasons T-TIP Status Worries U.S. Dairy Industry

Top Story  |   |  By: Tom Suber

By Mark O'Keefe

Trade negotiations and rapidity are concepts that don’t typically work well together. Both the United States and the European Union have pledged to conclude Transatlantic Trade and Investment Partnership (T-TIP) negotiations this year. That is why it is so concerning that a host of issues, including critical dairy concerns, are nowhere near resolution. 

“It is unclear how the two sides can reach an agreement that satisfactorily addresses the wide range of non-tariff barriers to trade, including the EU’s global geographical indications (GIs) which restrict sales of common food products, in only seven months,” says Tom Suber, president of the U.S. Dairy Export Council (USDEC). “U.S. negotiators should not conclude a T-TIP agreement without removing the existing barriers to U.S. exports and ensuring that new ones won’t immediately spring up to take their place. A bad deal is far worse than no deal at all.”

The U.S. dairy industry is united in its concern that dairy issues will not be appropriately resolved under that timeline. In a joint news release, USDEC, the National Milk Producers Federation and the International Dairy Foods Association praised a bipartisan group of senators for urging U.S. negotiators to remain firm in addressing the needs of U.S. agriculture, including key dairy issues.

1. Inappropriate non-tariff barriers.  Tackling tariffs means nothing if U.S. negotiators fail to remove existing EU non-tariff barriers to trade and gain assurances there will be no new non-tariff barriers erected. Failure in this area would only serve to deepen the existing dairy trade gap.

2. Excessively high tariffs. EU out-of-quota dairy tariffs are extremely high. On cheese, butterfat, and unsweetened milk powder or whey protein products, U.S. suppliers face tariffs ranging from €123-€221/100 kg net (about US$1,380-$2,479/ton).

3. Restriction of common food names via GIs. The EU is pushing harder than ever to restrict the use of common food names through its system of geographical indications, and its pressure is increasingly politicized. Recent statements from leaders in France and Greece and from European Commission officials echo a long-standing hard line on GIs, asserting they would accept no T-TIP deal unless the United States vowed to recognize the EU’s food and beverage GIs as part of it, in effect turning over categories worth millions of dollars.

Read more on the U.S. Dairy Export Council Blog.