US leadership blamed for TPP roadblock

That’s the view of DairyNZ chairman John Luxton, one of the industry leaders, officials and ministers at the recent talks. He told Dairy News the stalled talks are not all bad news as it will give the protagonists time to “recalibrate the world dairy issue”.

Luxton says the US, the biggest trader of dairy exports in the group (48% vs NZ at 32%) was effectively trying to have a dollar each way in the negotiations, which would have disadvantaged NZ, hence the negotiations were unsuccessful. 

“With a recalibration and a forward-looking approach by the US dairy sector there is a chance we can make more progress before the TPP is finalised. 

“Australia and NZ work closely together but it needs the US to come onside now and say their interests are in the original intention of the TPP. This involves a commitment to remove trade barriers rather than erect new ones because there is an element of that going on in this case.”

Luxton says if there was a commitment by the US to take a more liberal approach he’s sure Japan and Canada, with prompting by the US,  will see it was also in their interest to do the same. He says the Japanese market is now shrinking rapidly even at the high prices its farmers are paid. Farmers there average late-60’s in age and number only 10,000 – it’s a small industry.

“The point is in terms of the TPP discussions dairy to NZ is the equivalent to the Japanese auto industry. So we have to make sure it is on the table for the TPP region with the long term intention of removing tariffs. Likewise Canada, which essentially sets its own prices which are uncompetitive in the world market.  I’m sure Canada realises that supply management isn’t the way of the future.”

Luxton says in some cases tariff protection in Canada is close to 300%.  NZ is unique in that 95% of our dairy exports are traded on the world market.

“The nearest to that is Australia with 50%, so even the Australians have the huge buffer of their local market, and their industry size is about half ours. The NZ dairy industry has a future, but a key thing that must happen with this TPP is long term removal of the tariff protection that currently exists, particularly in the US but also in Canada and Japan.”

Luxton says while Canada’s elections are reported to be affecting position at the talks, he finds it unbelievable that 10,000 dairy farmers there are holding the country to ransom. Likewise in Japan where 10,000 dairy farmers are influencing a nation of 130 million people.