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New Trade Pacts Threaten US Dairy Market Access in Mexico

Jun 13, 2018

As Mexico enters new trade agreements, dairy processors in the European Union (EU) and Asia-Pacific countries will gain more footing in Mexico’s dairy market, according to a new U.S. Department of Agriculture (USDA) GAIN report. These shifts will primarily involve Mexico’s imports of cheese and milk powder, an area currently dominated by the United States.

In late April 2018, Mexico and the EU announced a bilateral agreement in principal that would allow for greater dairy market access for both partners.

The EU will gain access to the Mexican market with the establishment of two tariff-rate quotas – one for cheese and one for milk powder. During a five-year period, the EU would gradually gain a quota of 20,000 tons for mature cheeses and 5,000 tons for fresh cheeses, such as mozzarella. During the past year, U.S. dairy companies shipped 96,000 tons of cheese to Mexico.

The EU will also secure a quota of 30,000 tons of milk powder exports in the Mexican market when the agreement goes into effect. That amount would rise to 50,000 tons after five years. By comparison, the United States exported 289,000 metric tons of milk powder to Mexico in 2017.

Mexico is also currently involved in talks for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which would open new access in Mexico’s dairy market. The CPTPP includes Japan, Vietnam, Malaysia, Singapore, Brunei, Australia, New Zealand, Chile, Peru and Canada. According to the report, market shares of milk powder could shift even more as CPTPP talks continue. The countries in the CPTPP, if ratified, would receive a milk powder quota of 42,000 tons.

Marketplace shifts won’t be immediate. CPTPP has not been fully ratified and the EU-Mexico agreement has not yet been implemented.

The United States still maintains a geographic advantage for shipping dairy products to Mexico and faces no quotas due to the North American Free Trade Agreement (NAFTA). Maintaining dairy market access in Mexico is IDFA’s number one priority in the NAFTA modernization efforts.

For more information, contact Beth Hughes, director of international affairs, at bhughes@idfa.org.

 
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