TPP – Better Dairy Deal Essential

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The Chairmen of the Dairy Companies Association of New Zealand (DCANZ) and DairyNZ are urging TPP Governments not to miss this once in a generation opportunity to improve dairy trade in the region. DCANZ Chairman, Malcolm Bailey, and DairyNZ Chairman, Hon. John Luxton, have travelled to Maui, Hawaii, where TPP negotiators are aiming to conclude a deal this week, to highlight the need for an equally ambitious outcome for dairy as those on the table for other goods.

“There is no good reason for dairy to be left behind in this agreement. In fact it should be a very simple process of following through with what was signed up for in 2011” says Malcolm Bailey.

Hon. John Luxton is in complete agreement. “I urge Ministers to remember that this is an agreement to grow trade and support economic prosperity. Not one to maintain protection and distortion.” says Luxton

The New Zealand dairy industry is concerned at suggestions that some negotiating countries are pushing for New Zealand to accept a substandard outcome for dairy market access. Dairy accounts for approximately 30% of New Zealand?s merchandise trade exports and it is an essential contributor to New Zealand?s rural communities. Consequently the New Zealand dairy industry cannot see a TPP deal stacking up for New Zealand without a good deal on dairy.

“There’s a bigger picture here also” says Bailey. “On a recent trip to New Zealand, US Assistant State Secretary spoke of the objective for TPP to set a high quality framework for others to join, including possibly China. From a dairy perspective China has already come forward and entered agreements that result in complete tariff elimination with New Zealand and Australia. It would be very strange if TPP were to be less liberal than those agreements.”

John Luxton noted that the New Zealand dairy industries ask of negotiators is reasonable. “We are a small country, of four million people, where dairy is very important to our economic wellbeing. But we are not asking for a handout, our farmers are not subsidised, we do not protect our market. We just want a level playing field.”

It is often quoted that New Zealand dairy exports account for 30% of global dairy trade. This is true when the definition of “dairy” is constrained to butter, cheese, milk powder, and a limited range of protein products. But dairy trade is becoming increasingly sophisticated. Including a wider product group including ice cream and lactose in the calculation shows that of the global trade that can be strongly linked back to a “bucket of milk” New Zealand accounts for only 17%. Within the TPP region New Zealand’s role is smaller again being the second to the US in its share of milkpowder, cheese and protein exports, and accounting for 30% of total regional dairy trade compared to 48% from the US.

“Parts of the US industry are making much of the need to maintain protections against New Zealand dairy exports. Given the US is the largest dairy exporter in the TPP region we can’t understand why they are not fighting instead for the opportunity that liberalisation holds for them.” says Bailey.