The ambitious Trans-Pacific Partnership (TPP) trade talks, focused on the Asia-Pacific region, may soon become increasingly attractive for the U.S. dairy industry. Japanese Prime Minister Yoshihiko Noda announced late last week that Japan, a historically protectionist country, will engage in preliminary steps to join the TPP negotiations. Canada and Mexico quickly followed, announcing their interest in joining the agreement as well.
All three countries are top-five dairy export destinations for the United States. If accepted, they 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.
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. That's an increase of more than 100 percent from the previous year.
Japan and Canada have restrictive trade policies towards dairy products, so formal entry into the TPP could potentially open these narrow markets to U.S. dairy exports. It remains to be seen how willing these countries will be to open their agriculture sectors, however. Canada, in particular, likely would have to give up its controversial dairy supply-control system.
“IDFA welcomes the decisions of Japan and Canada to formally begin the process of joining this ambitious agreement,” said John Kelly, IDFA manager of international affairs. “However, it’s important that they demonstrate a strong commitment to reducing tariff and non-tariff barriers if the TPP is to remain an ambitious and high-standard agreement.”
The TPP is a comprehensive regional agreement that aims to liberalize trade and investment and address 21st century challenges. The agreement's Asia-Pacific orientation and potential for expansion to other important dairy markets, such as Japan and possibly China, make it an important vehicle for opening markets and establishing a fair and efficient system of international trade for dairy products.
U.S. dairy exports to Canada in 2010 were $385.5 million, while exports to Japan reached $203.7 million last year. Mexico, which allows full market access under the North American Free Trade Agreement, last year imported over $837 million of U.S. dairy products.
For more information, contact Kelly at jkelly@idfa.org.