TPP too important for compromise

The Dairy Companies Association of New Zealand (DCANZ) is concerned at reports that the US and Japan may seek to conclude a deal which leaves dairy trade liberalisation out in the cold.

“We urge leaders to stand by their 2011 commitment to a comprehensive deal,” says DCANZ chairman Malcolm Bailey (pictured). “This cannot be achieved without addressing access for dairy, which remains one of the most protected sectors amongst the TPP partner countries.” 

The Japanese World Trade Organisation (WTO) bound tariffs for skim milk powder and butter are equal to 217% and 360% respectively.  Canada’s dairy market access regime is characterised by small quotas and large out of quota tariffs in the order of 200 to 300%.  These conditions often mean trade is prevented.

“A successful conclusion of the TPP agreement would be the biggest step forward in trade liberalisation since the Uruguay Round of WTO negotiations was concluded in 1994,” says Bailey. “As long as it meets its stated objectives of comprehensivity and tariff elimination, the increased trade and investment it creates will have far reaching economic growth benefits for all 12 countries party to the negotiation. 

“Japanese Prime Minister Shinzo Abe said at an OECD Ministers meeting earlier this year that he ‘would never be afraid of reforms’ and that ‘now was the time for bold reforms’.  DCANZ agrees now is the time for bold reforms.  Pacific Rim nations must not look back on this agreement and regret they did not push harder and achieve more.

“Any deal that does not achieve good outcomes for dairy is an unacceptable deal,” says Bailey.

New Zealand is the world’s largest exporter of dairy products, with dairy delivering 35% of New Zealand export returns.  “We do this without subsidies, through efficient farming and dairy manufacturing.  But the tariffs incurred on New Zealand dairy product exports are equivalent to $68,000 per farmer and with some markets we cannot trade at all due to barriers.  These barriers do not benefit consumers and they ignore the role trade needs to play in ensuring nutritional security for the world’s growing population,” he says. 

“DCANZ does not accept the argument that maintaining tariffs is necessary to protect Japanese agriculture. It notes that even with one of the world’s most protected dairy sectors, Japan is struggling with succession for retiring dairy farmers and its milk supply is declining. We suggest the answer does not come from maintaining the status quo, but from doing something different.”

Allowing imports to complement Japanese supply will create the ability for Japanese farmers to specialise where they are most competitive without the current restrictions aimed at trying to balance a market which cannot be balanced by domestic supply alone.

“It would be disappointing to DCANZ if the US agreed to a deal with Japan that did not meet the standard that all TPP members agreed to. Partnership is a central element of the intent for this agreement, and partnership must include adhering to the principles that all leaders agreed for TPP,” says Bailey.