Expanding opportunities for U.S. dairy exports has become extremely important to the U.S. dairy industry as growing sales overseas play an indispensable role in supporting America’s dairy farmers, processors, exporters and a healthy rural economy.
Free trade agreements (FTAs) that reduce or remove tariff and nontariff barriers are integral to creating U.S. dairy jobs and building a brighter future for the industry. USDEC and NMPF submitted detailed comments to the United States Trade Representative (USTR) outlining country-by-country trade barriers and encouraging USTR to resolve these challenges, including through the pursuit of FTAs with key markets. The facts on the growing demand for U.S. dairy and the value of FTAs speak for themselves:
In 2019, the U.S. exported more than $6 billion in dairy products, equivalent to approximately 15% of total U.S. milk production. In comparison, before NAFTA was implemented in 1993, the U.S. exported just $618 million worth of dairy products.
Dairy exports with FTA partners have helped add the equivalent of $17 billion in revenue for dairy farmers since each FTA was implemented.
That growth is equivalent to 1.4 billion gallons of milk, greater than what Michigan, the sixth largest U.S. milk producing state, produces in one year.
Key Trade Agreements
United States-Mexico-Canada Agreement (USMCA) Careful monitoring and enforcement of USMCA will be necessary to ensure the U.S. dairy industry is able to reap the full benefits of the progress it made to break down trade barriers. Canada, in particular, has a long history of sustained efforts to undermine access to its market. This mandates dedicated enforcement to ensure Canada’s dairy tariff rate quota (TRQ) administration procedures fully comply with USMCA, as the current system risks discouraging full utilization and valuation of the market access quantities by the U.S. In addition, Canada must fully adhere to USMCA’s reforms to its trade-distortive milk pricing programs in order to avoid replicating Class 6 and 7’s harmful impacts. With respect to USMCA’s other trading partner, Mexico is U.S. dairy’s largest export market, making the effective implementation and strong enforcement of USMCA with them key. In particular, the enforcement of safeguards for common name cheese terms is essential as is restoring smooth and dependable regulatory trading conditions.
Phase One Agreement with China
China is the third largest export market for U.S. dairy products, importing more than $373 million in 2019 despite the dire impact of China’s retaliatory tariffs. While a Phase One agreement made critical progress by resolving numerous regulatory impediments for U.S. dairy exports, retaliatory duties still place U.S. exports at a disadvantage and China has to date not prioritized increased dairy purchases to meet its Phase One agriculture purchasing commitments. Targeted tariff relief and a focused pursuit of greater dairy sourcing from the U.S. is necessary moving forward.
Phase One Agreement with Japan
The Phase One agreement made progress to expand market access for U.S. dairy products and secured imported market access parity on various tariff lines. However, a comprehensive FTA is necessary to address remaining market access needs and institute the nontariff commitments necessary to help provide for dependable trading conditions in the future.Executive-Summary_National-Trade-Estimate-Dairy-Barriers-Overview-111220_Final
Comments - USDEC NMPF National Trade Estimate (NTE) - USTR 10.29.2020
To read the full executive summary, click here.
To read the full comments to the USTR, click here