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Hong Kong Ministerial Yields Some Action, Good IDFA Interaction

Dec 19, 2005

Hong Kong Ministerial Yields Some Action, Good IDFA Interaction

The Sixth World Trade Organization (WTO) Ministerial Conference, which ended last night in Hong Kong, yielded one very significant agreement for the dairy industry: the elimination of export subsides by 2013. In addition, the IDFA delegation was able to further dialogue on trade issues important to IDFA members.

Much has been written about the low expectations of the 149 trade ministers who traveled to Hong Kong last week in hopes of ending the deadlocked WTO negotiations. After six days of arduous talks, a compromise deal was finally hammered out that includes incremental progress in export competition, while leaving the toughest decisions on domestic subsidies and market access still to be decided next year.

The ministerial set a deadline for no later than April 30, 2006, to establish the formulas used to reduce trade distorting domestic subsidies and increase market access.

"We are pleased to see that the European Union (EU) and all the WTO membership have finally agreed that agricultural export subsidies should be eliminated, a longstanding goal for U.S. dairy," said Clay Hough, IDFA senior vice president and general counsel.

Despite the limited movement on issues in Hong Kong, Hough said that "an ambitious result still remains viable."

"Our industry will re-double its efforts," he said. "The upcoming year will be the year these negotiations succeed or fail for the U.S. dairy sector, so it is imperative that we remain deeply engaged as an industry with our government to help determine the best course to advance our objectives. This is the best opportunity we have had in decades to position our industry for unparalleled global market success."

To emphasize the interest of the U.S. dairy industry in the negotiations, representatives from several IDFA member companies and IDFA staff attended the Hong Kong ministerial. During the conference, the IDFA delegation met with government officials from the U.S. Trade Representative's Office and the U.S. Department of Agriculture, and with congressional staff from the trade and agriculture committees.

The IDFA delegation reiterated its support in the meetings for the U.S. approach to the talks, emphasizing that it is essential to remain very ambitious in all three "pillars" of the agriculture negotiations: market access, domestic support and export competition. Each has important implications for the competitiveness of U.S. dairy, both domestically and in global markets.

"It is important that we continue to press for maximum ambition across all the agriculture negotiating pillars, because that is an outcome under which our industry would thrive," Hough noted.

Neal Schuman, president of Arthur Schuman, Inc., and a member of the IDFA delegation, noted that "the final agreement will have a direct impact on my business, and this is why I attended the conference."

Schuman emphasized that the United States has "great potential to be a big supplier of cheese and other dairy products to the global market. We started our company many years ago as a cheese importer, but now source almost half our cheese in the United States. Depending on how ambitious the Doha outcome is, we could source much more cheese from the U.S. for exports, building on what was accomplished through the Uruguay Round."

The IDFA delegation also reiterated its opposition to the EU effort to extend geographical indications. The conference did not delineate an outcome on this issue, but only agreed to keep it on the agenda. This matter continues to be an extremely contentious point between the United States and the EU.

The IDFA delegation also talked with U.S. negotiators about the importance of foreign market access for U.S. dairy companies.

"We will continue this dialogue in earnest as the U.S. is in the process of finalizing its market access priorities in agriculture," said Hough.

In another area of interest to IDFA member companies, the conference reached agreement on providing duty-free, quota-free access for all products coming from least developing countries (LDC). Some of the least-developed countries that will benefit are sugar producers. IDFA would like to see additional liberalization of global sugar markets, including the U.S. market, though it remains to be seen if this initiative will further that liberalization.

Overall, the Hong Kong effort was an important opportunity for the IDFA delegation.

"We established deeper relationships with key players in the U.S. government and many of our industry counterparts around the world," said Hough. "We look forward to continuing the dialogue to generate the success we need."

For more information, contact Clay Hough at (202) 220 3500,


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