Wisconsin Ag Connection - Feingold Pushing for More Fairness in Dairy Trade Policy

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Feingold Pushing for More Fairness in Dairy Trade Policy
Wisconsin Ag Connection - 03/15/2010

A group of U.S. Senators, including Wisconsin's Russ Feingold, are leading a bipartisan effort to urge the Obama Administration to carefully consider the threat to U.S. dairy farmers and processors in upcoming trade negotiations involving New Zealand. The Middleton Democrat says one-sided dairy provisions in trade negotiations involving New Zealand will be discussed at upcoming meetings later this month on the Trans Pacific Partnership.

In a letter sent to United States Trade Representative Ron Kirk, the senators raised concerns that anti-competitive practices in New Zealand's dairy industry could greatly harm U.S. dairy farmers.

"Past trade agreements have opened opportunities for foreign farmers, including those in New Zealand, but it hasn't been a two-way street," Feingold said. "With American dairy farmers facing record low dairy prices, it is exactly the wrong time for another trade agreement that short-changes them. The Obama administration must ensure that any agreement supports the long-term viability of America's dairy farmers."

The letter stated that New Zealand's dairy industry is a global power dominated by one company that could undercut the U.S. dairy industry while providing few additional export opportunities for American farmers and processors.

"We have been informed that losses to U.S. dairy producers may total up to $20 billion over the first decade of the agreement if U.S. dairy restrictions on exports from New Zealand are fully phased out in the TPP," the memo stated. "Moreover, America's dairy exporters do not have the prospect of focusing on other significant new opportunities that the agreement would open up given that most other TPP participants are already U.S. free trade agreement partners or have relatively limited tariffs and offer only small additional market opportunities."

It went on to say that New Zealand's dairy industry is dominated by one company that operates as a virtual monopoly in controlling more than 90 percent of the country's milk production and approximately 40 percent of trade in key internationally traded dairy commodities.

"In light of this market power, the Administration should consider whether genuine competition is possible as it proceeds with the TPP," the senators wrote.

Feingold also said that according to testimony submitted recently to the International Trade Commission, imports of New Zealand dairy products facing tariff-rate quota limitations generally account for a relatively small proportion of New Zealand's total exports of such products. In contrast, New Zealand's sales of MPC and casein imports to the U.S. market generally account for over 50 percent of its exports of these products to all destinations.