European Union trade influence grows
But the United States remains undeterred
When the United States withdrew from the Trans-Pacific Partnership shortly after President Donald Trump took office last year, it was unclear what would happen next. Would the remaining 11 countries renegotiate or abandon the deal altogether?
Fast-forward a year, and now we know that those countries have signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
Where does that leave U.S. dairy? Opening new markets via free-trade agreements has been a critical component for providing opportunities to expand U.S. dairy exports, and we’ve stressed to the administration and Congress that trade agreements, especially in the Asia-Pacific region, are vitally important to the future of our industry.
Fortunately, they know the United States can’t stand still, because the European Union (EU) and other global competitors are charging ahead, seeking competitive market opportunities in these markets. Like the United States, the EU is searching for new markets for its growing milk supply. While we’ve been fighting a public anti-trade sentiment at home, the EU has been negotiating free-trade agreements, including ones with Canada, Japan, Singapore and Vietnam.
The EU is currently negotiating with Mercosur and updating its pact with Mexico, by far the biggest export market for U.S. dairy. At last count, the EU had agreements in place with 31 countries — and others either partly in place or pending with 54 countries. It’s also updating pacts with five countries and negotiating new deals with 19 others.
Once U.S. market share is lost to global competitors, it’s almost impossible to get back. What’s more, trade agreements don’t just lower tariffs for goods; they also provide certainty for exporters.
The current market conditions are especially difficult for the U.S. dairy industry. Anything that brings certainty to the marketplace, along with expanded opportunities, would be very much appreciated.
How the United States ultimately will respond remains to be seen, but we’re confident that officials in Washington recognize that the stakes are high. We’ve met several times with members of Congress and the administration to stress the value of bilateral agreements with Japan, Vietnam and Malaysia for the U.S. dairy industry.
To bolster our requests and emphasize the importance of a healthy dairy industry to the U.S. economy and jobs, the International Dairy Foods Association (IDFA) commissioned Dunham and Associates, an economic research firm, to quantify the economic impact of the dairy products industry. With the administration so heavily focused on creating and keeping jobs in America, we are hammering home how much we contribute to those efforts.
According to IDFA’s economic impact tool, “Dairy Delivers,” U.S. dairy companies support nearly 3 million jobs and generate more than $39 billion in direct wages. They have an overall economic impact of more than $206 billion with unlimited potential to provide more jobs and growth, given a level playing field in global markets.
We’re sharing these data with officials in Washington and throughout the country. Updating and modernizing existing free-trade agreements such as the North American Free Trade Agreement is a crucial step, but it’s imperative for the United States to take aggressive and simultaneous steps to purse new trade agreements.
We’re also urging the United States to resume its leadership role at the World Trade Organization (WTO) and to guide the WTO’s mission of liberalizing trade for agriculture. Other countries are eager to fill any void with standards and rules that raise barriers, lack sound science and obscure transparency.
Earlier this year, President Trump requested an extension of Trade Promotion Authority for quick approval of trade pacts, which is a very positive sign. Gaining market access for U.S. dairy is an important goal, and a proactive U.S. trade policy will help lead us into a bright future.