Top U.S. dairy industry officials are headed to Mexico next week on a mission to save their top export market as European Union and New Zealand competitors look for ways to exploit the uncertainties created by President Donald Trump’s push to renegotiate NAFTA.
That’s a message the former Agriculture secretary also has for the Trump administration as it looks to make changes to NAFTA to “bring back” manufacturing jobs to the United States.
Vilsack and Jim Mulhern, the president and CEO of the National Milk Producers Federations, participated in a joint interview with POLITICO on Friday, just days before they are set to join Michael Dykes, the CEO and president of the International Dairy Foods Association, Jaime Castaneda, NMPF’s senior VP for strategic initiatives and trade policy, and Mark O’Keefe, USDEC’s VP for editorial services, on a flight to Mexico City for the annual meeting of the Mexican Milk Producers Federation and to meet with the country’s secretary of agriculture.
The trip comes as Mexico is already involved in talks with the European Union on updating an existing trade agreement and is considering starting talks with New Zealand, a dairy export powerhouse.
Both are worrisome for the U.S. dairy industry, which currently has more than 70 percent of the Mexican import market and has worked hard to build up consumer demand in Mexico for dairy products. The situation has only been made worse by Trump’s harsh rhetoric toward Mexico, which has encouraged the country to consider other suppliers.
“I think it’s fair to say that some of the comments in the past have created a level of concern and they’re doing what a reasonable country does in those circumstances, which is to make sure they are considering what other alternatives there may be,” Vilsack said. “And that’s why this trip is important now.”
From the U.S. dairy industry’s perspective, the Mexican portion of NAFTA has worked like a dream over the past 23 years, helping develop the southern U.S. neighbor into a market that takes nearly a third of U.S. dairy exports, or $1.2 billion worth in annual sales, Vilsack said.
U.S. dairy producers have invested heavily to take advantage of the duty-free access that NAFTA gave them in Mexico and don’t want to see that traded away, though the Trump administration seems intent on somehow making it harder for Mexico to export manufactured goods to the United States, Mulhern said.
“We built a very strong and dynamic relationship of mutual benefit over the last 15 years and it is our largest and most important foreign market,” Mulhern said. ”We’re certainly looking to have negotiations and discussions to focus on ways to strengthen NAFTA, not to take away from the progress that’s been made to date.”
The U.S. dairy sector is particularly worried that the uncertainty created by the Trump administration might tempt Mexico to agree to EU demands on “geographical indications,” which could bar U.S. producers from selling certain cheese varieties in Mexico because their names originated in Europe. The EU won similar concessions in a trade deal with Canada, much to the anger and frustration of U.S. producers.
In fact, from the U.S. dairy industry’s perspective, if there’s any aspect of the NAFTA agreement that needs fixing, it’s the bilateral deal with Canada. Not only did the 1989 U.S.-Canada free trade agreement provide very little market access, but Canada has repeatedly tried to raise new barriers to U.S. exports in the intervening years, Mulhern said.
«As we look at NAFTA, we think that the agricultural trade relationship that’s developed between the U.S. and Mexico is a model, whereas certainly with respect to dairy, the agricultural relationship with Canada is a problem,” Mulhern said.
Even now, U.S. industry accuses Canada of implementing a program to dump its surplus skim milk powder production on the world market. “We frankly don’t want to wait for a NAFTA renegotiation to address that,” Mulhern said.
Making the current situation more nerve-wracking is that the Senate still hasn’t confirmed former Georgia Gov. Sonny Perdue to be Agriculture secretary and a number of other top level political slots are still empty at the Agriculture Department. That has raised concern that there currently is no strong advocate in the administration to push for trade policies that make sense for farmers in any NAFTA renegotiation.
“I think it’s incredibly important that we get a secretary of agriculture … to make sure that agriculture’s interest generally, and dairy’s interest specifically, is advanced and protected and defended,” Vilsack said.
«I just got back from a meeting where was several hundred producers and I can tell you there’s a degree of anxiety among producers about precisely what the trade policy is going to be and how the approach will be to NAFTA and specifically when are we going to have an ag secretary and the undersecretaries who are important to running that department,» he added.
Source: Politico
Link: http://www.politico.com/story/2017/03/us-dairy-officials-head-south-on-mexico-trade-rescue-mission-236097