In three sets of comments filed last week with the U.S. Trade Representative, IDFA encouraged the acceptance of Canada, Japan and Mexico as partners in the Trans-Pacific Partnership trade negotiations. IDFA warned, however, that current protectionist domestic policies and potential restrictive trade agreements between these countries and the European Union go against the goals of the partnership and would have to be abandoned.
Canada is the second-largest export market for the U.S. dairy industry, even though a number of the country's current policies are designed to restrict market access for imported dairy products. Canada has operated under a supply control systems since 1970, which keeps prices artificially high, and it employs quotas and prohibitive out-of-quota tariff rates to limit imports.
More recently, Canada implemented compositional standards for cheese that effectively limit imports of cheese and related ingredients, such as casein and whey protein concentrate. Canadian officials now are considering similar compositional requirements for yogurt imports.
IDFA also expressed concerns about ongoing Canadian negotiations with the EU on a free trade agreement that could potentially undermine the ability of TPP partners to market commonly used names for cheese.
"If Canada is to be accepted as a party to the agreement, they must be willing to abandon dairy policies that are in conflict with the ambitious goals of the TPP negotiations," IDFA said.
Mexico is the top export market for U.S. dairy products and has been a success story for dairy trade under the North American Free Trade Agreement. Allowing Mexico to join the TPP talks would offer no new market access, but having Mexico and Canada participate would improve the North American regulatory environment and make trade more efficient.
Japan is the fourth-largest export market overall for U.S. dairy products and third-largest in the Asia-Pacific region, but the country's dairy imports are strictly regulated by quotas and high tariffs ranging from 25 percent to 35 percent.
"Japan must recognize and accept that the TPP is intended to be a high-standard and comprehensive 21st century agreement," IDFA said. "Any agreement that includes Japan must not exempt its dairy sector and should include real and significant market access gains for U.S. dairy products."
IDFA believes Japan is taking positive steps to enter into new trade agreements, indicating that it's serious about becoming a TPP partner.
The TPP’s Asia-Pacific region constitutes the U.S. dairy industry's fastest growing export market, totaling over $1.2 billion in dairy exports during 2010. If accepted, the three countries would join Vietnam, the seventh-largest dairy export market, along with Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore and the United States as parties to the negotiations.
For more information, contact John Kelly, IDFA manager of international affairs, at firstname.lastname@example.org.