TPP Too Important for Compromised Finish
Tuesday October 28, 2014
The New Zealand dairy industry is urging Trans Pacific Partnership (TPP) partners not to compromise on the quality of
the deal to get it done quickly.
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. "This
cannot be achieved without addressing access for dairy, which remains one of the most protected sectors amongst the TPP
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 - 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 2005. 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 worlds 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.