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TPP At Tipping Point

Published on: 17:59PM Mar 11, 2010

Most of the trade agreements that are in various stages of formation – free trade deals with Panama, Colombia, and South Korea, along with the big enchilada, the Doha WTO round – are essentially in limbo.  There’s not a lot of enthusiasm in Congress right now to force a vote on those agreements.

On the other hand, there is momentum in Washington, and around the Far East, behind the so-called Trans-Pacific Partnership trade pact – and that’s bad news for America’s dairy farmers. 

As Thursday’s Wall Street Journal reported, America’s dairy farmers have a lot at stake – and a lot to lose – if dairy trade gets written into this potential free trade agreement (which at this point would involve expanding trade between the U.S. and Brunei, Peru, Singapore, Chile and New Zealand).  It’s not just that New Zealand is indeed “the Saudi Arabia of dairy,” as the Journal noted.  It’s that one economic entity there has the ability to direct, massage and finesse so much of that trade.  So the issue isn’t as much about trade with any one country; it’s about giving one company, Fonterra, much greater access to the most lucrative consumer market in the world.

My colleague Shawna Morris told the Journal’s Lauren Etter, Fonterra is "a powerhouse within the global dairy industry with the ability to significantly sway U.S. as well as world dairy market dynamics.”

These concerns of NMPF were echoed in a letter sent today to the U.S. Trade Representative’s office by a bipartisan group of 30 senators, led by Sens. Feingold, Crapo and Specter (a copy of which you can read here).  I should also note that Dairy Today’s Jim Dickrell wrote about this issue recently after having spoken to me about why NMPF is concerned about this issue.

Free trade boosters reply that, well, you just need to look at  the opportunities a TPP would afford for the U.S. to export more dairy products elsewhere.  But the fact is that most of the countries involved in the TPP – Singapore, Chile, and Peru – are nations with which we already have free trade agreements.  We’re not going to be able to improve on what is already an open door with those countries.  All this was outlined in testimony NMPF presented last week detailing the negative consequences that could arise from a poorly-negotiated TPP.

Perhaps the most telling quote from today’s Journal story is from the economist whom the New Zealand dairy industry is using as a hired gun to counter the NMPF message on this issue.  Daniel Sumner told the Journal that whatever the expected losses are for U.S. dairy farmers, “other sectors” of the economy will profit in their stead.  That’s hardly a comforting message for a sector of the economy that lost billions in revenue last year, and billions more in hard-earned equity that got burned up as farmers tried to stay afloat in 2009 and now 2010. 

Our elected officials, up to and including the White House, need to know and understand that a TPP agreement with dairy on the table is going to produce as bad a result for our dairy farmers as last year’s loss-of-exports-driven price plunge. 

To help drive that point home, you can use this web link to contact your members of Congress about the stakes involved in this issue, using NMPF’s Dairy GREAT email alert system.