Milk producers say T.P.P. grade is not an ‘A,’ not an ‘F.'

The U.S. Department of Agriculture on Oct. 8 issued a summary of agriculture-related provisions of the Trans-Pacific Partnership agreement, including those related to the most contentious issues facing negotiators, from the American point of view, dairy and sugar; indeed, the T.P.P.’s dairy agreement was among the last reached.

The U.S.D.A. indicated the United States exported $7.1 billion in dairy products in 2014, including $3.6 billion, or 51% of the total, to the 11 other T.P.P. countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam). The U.S.D.A. outlined how the United States would benefit from improved access to the other T.P.P. nations for its dairy products. But the chief concern of U.S. milk producers was what the United States offered with regard to greater access to the American market.

The U.S.D.A. indicated the United States agreed to eliminate tariffs on dairy products from Malaysia and Vietnam between zero and 10 years. Because of the modest volumes involved, this wasn’t so controversial.

More important, the United States said it would eliminate tariffs on ice cream and infant formula from Australia and New Zealand and on artisanal cheeses from Canada. U.S. tariffs on milk powders would be eliminated over 20 to 30 years for New Zealand and Australia and on one cheese tariff line each for New Zealand and Australia. The U.S.D.A. indicated safeguards would be established for those products.

The U.S.D.A. explained safeguards allowed under the agreement aimed “to help farmers adjust to potential import surges.” Countries secured safeguards for products of greatest concern to their domestic producers.

For all other dairy products subject to tariff rate quotas (T.R.Q.s), the United States will establish new T.R.Q.s for New Zealand and Canada. The T.R.Q.s for Canada have growth provisions similar to those established by Canada for the United States. For New Zealand, the T.R.Q.s have quantities and perpetual growth elements comparable to those established in the U.S.-Australia Free Trade Agreement. For Australia, existing preferential access available under the U.S.-Australia F.T.A. for products such as butter, cheese, evaporated and condensed milk and other dairy will be transferred to new perpetual T.R.Q.s that will be created under T.P.P.

With regard to enhancing market access in the other T.P.P countries for U.S. dairy products, the U.S.D.A. said Japan will eliminate many of its tariffs on cheese within 16 years and all tariffs on whey in 20 years. Canada will expand access through expanded T.R.Q.s for cheese, milk powder, butter, fluid milk, yogurt, concentrated milk, creams and ice cream. Malaysia immediately will eliminate most tariffs, and Vietnam will eliminate all tariffs within five years.

“Based on information available to date, it appears that our industry has successfully avoided the type of disproportionate one-way street that we were deeply concerned could have resulted under this agreement,” said Jim Mulhern, president and chief executive officer, National Milk Producers Federation. “New Zealand did not get the unfettered access to the U.S.
market that it long sought, but Japan and Canada did not open their markets to the degree we sought. On an ‘A’ through ‘F’ grading scale for T.P.P., it was long clear the agreement would not score an ‘A.’ The preliminary information suggests that the result is not an ‘F’. Our assessment of which of the remaining grades the final agreement merits will hinge on a careful analysis of its freshly agreed-upon details.”

The U.S.D.A. summary noted the United States exported $1.8 billion in sugar and sugar products in 2014 with the T.P.P. region accounting for $1.3 billion of that total, or 72%. But again, the primary concern of both sugar producers and users was what increased access was provided to the American market.

The U.S.D.A. said under the T.P.P., the United States will establish new T.R.Q.s for sugar and sugar-containing products totaling 86,300 tonnes for Australia, Canada, Vietnam, Malaysia and Japan. Indications were the T.P.P. T.R.Q. for Australia comprised 65,000 tonnes of that total. In the years when the Secretary of Agriculture determines there is a need to import additional sugar, Australia’s and Canada’s T.P.P. T.R.Q.s will be increased.

The Sugar Users Association welcomed the increased allocation for Australia, which would be in addition to that nation’s current T.R.Q. allocation, which was 87,402 tonnes of sugar for fiscal 2016. Additionally, Australia will receive 23% of the discretionary quota in years when domestic production falls well short of demand. That share was increased from 8%.

At the same time, American sugar users complained the industry sought and needed even greater access to Australian sugar.

Australian sugar cane growers welcomed the increased access to the U.S. market but lamented it fell far short of their expectations.

“Overall, the deal is a net positive for Australian sugar, not in the ballpark of what we would have liked from the U.S.A. market, but is certainly a whole lot better than where we started five years ago,” said Paul Schembri, chairman of Canegrowers, an Australian producer association.