What is in this article?:
- Japanâ€™s dairy policy key at TPP bargaining table
- Jigsaw puzzle of dairy imports
- Japan’s dairy farmers are pushing for policy exclusions from the TPP talks.
Jigsaw puzzle of dairy imports
When the U.S. joined the TPP-FTA talks 18 months ago, most of the discussion on dairy was about how much additional market access, if any, the U.S. would provide to Australia and New Zealand. Australia already had an FTA with the U.S. and New Zealand had the largest dairy products trader in the world, Fonterra, which was accused of having monopoly powers in some markets and products. That equation changed some when Canada joined the talk. They have a closed domestic supply-managed market and both the U.S. and New Zealand want increased access. Greater access to the Japanese market for the U.S., New Zealand and Australia would relieve some of the U.S. concern that New Zealand imports will destabilize U.S. markets.
The jigsaw puzzle of dairy imports gets even more intriguing when other trade agreement negotiations are considered. The EU and Canada are overdue for completing their trade agreement and dairy exports from the EU to Canada are one of the unfinished items. The EU is looking for new markets for dairy products when production quotas end in 2015. The EU is just starting trade agreement negotiations with the Japanese and will begin with the U.S. by the end of the summer. The U.S. should expect the same challenges on imports from the EU as the Canadians now face, and the EU will seek greater access to Japanese markets.
Whatever the Canadians provide the EU in dairy product market access, they will also have to provide to their TPP-FTA partners – the U.S., Australia and New Zealand. Japan probably cannot achieve a trade agreement with the EU without giving greater access to the Japanese dairy products market. What Japan does for the EU it will also have to do for its TPP-FTA partners. Finally, the U.S. will likely provide the EU with access similar to what it provides to its TPP-FTA partners. The dairy farmers that get squeezed the most are the Canadians and the Japanese, the two countries that have supply management programs and high domestic prices.
Consumers will gain in all these countries, but the biggest gains will be by consumers in Canada and Japan. Gains will be less if sanitary and phyto-sanitary rules are not based on sound science and act as a non-tariff trade barriers.
Prime Minister Abe has no choice but to reject the idea of completely protecting Japan’s dairy industry. The best he can do is maintain the fluid consumption market with some processing to balance seasonal milk supplies. Dairy product markets would be more open than anyone would have imagined a few years ago.
Ross Korves is an Economic Policy Analyst with Truth About Trade & Technology (www.truthabouttrade.org).
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