U.S. Views on Global Trade Policy Issues

Tom Suber, President

U.S. Dairy Export Council

Trade Policy: Needs and Necessities for a Balanced Global Trade Environment

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• Founded by Dairy Management Inc.

• Farmer checkoff funded, but driven by processors and traders

• Goals − Grow value and volume− Help U.S. suppliers improve their

competitiveness

USDEC: An Introduction

Trade Policy

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Regulatory AffairsResearch

and InsightsImage Marketing

Crisis Preparedness

• Trade Treaties: TPP & TTIP

• Common cheese names

• Access constraints

• Access rules

• Dairy product standards

• Plant import approvals

• Market insights

• Improve U.S. product supply portfolio

• Improve supply chain logistics

• Activate “Why U.S. Dairy” messaging

• Promotional assistance

• Strengthen exporter’s capability to respond to a crisis abroad

USDEC Focuses on the Medium to Long Term

Development of U.S. Dairy Trade

0,0%

2,0%

4,0%

6,0%

8,0%

10,0%

12,0%

14,0%

16,0%

18,0%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

To

tal M

ilk

So

lid

s, %

of

U.S

. P

rod

uc

tio

nU.S. DAIRY TRADE BALANCE, 1996-2015

Exports Imports

Implementation of Uruguay Round

Begins 1995

NAFTA (with Mexico) Takes

Effect 1994GATT Constraints

Top Out

China Joins WTO

16 U.S. FTAs Implemented from

2004-2012

Development of U.S. Dairy Trade

NAFTA (with Mexico) Takes Effect

16 U.S. FTAs Implemented from 2004 On

Implementation of Uruguay

Round Begins

China Joins WTOGATT

Constraints Top Out

FTAs’ Role in Driving Export GrowthGrowth in U.S. Dairy Exports to FTA Partner Countries

FTAEffective

Year2015

$ Million% Growth

Canada 1989 554 +2,628

Mexico 1994 1,280 +412

Jordan 2002 6 +217

Singapore 2004 68 +737

Chile 2004 68 +2,512

Australia 2005 137 +2,346

El Salvador 2006 16 +220

Honduras 2006 24 +224

Nicaragua 2006 22 +429

Guatemala 2006 33 +9

FTAEffective

Year2015

$ Million% Growth

Morocco 2006 5 +4,700

Bahrain 2006 7 +1,280

Dom. Rep. 2007 78 +348

Costa Rico 2008 15 +255

Oman 2009 1 +133

Peru 2009 73 +263

S. Korea 2012 305 +37

Colombia 2012 55 +547

Panama 2012 40 +20

Policy Drivers Shaping Dairy Trade

• Prior Global Trade Terms

‒ Uruguay Round expanded the total pie, but also established country-specific

TRQs uniquely benefiting existing major dairy suppliers based on now outdated

trading patterns

• Emerging suppliers such as U.S. have to compete for remaining MFN TRQs

• Trade Agreements (e.g.)

‒ U.S. FTA with Mexico has proven instrumental in expanding U.S. exports

‒ New Zealand FTA with China creating advantages in key growth market

Policy Drivers Shaping Dairy Trade

• Non-tariff Barriers

‒ Despite WTO SPS & TBT Agreements, non-tariff barriers proliferating (e.g.)

‒ Russian import ban

‒ Overly burdensome certificate requirements

‒ Narrowly targeted pricing policies designed to impact imports

‒ Geographical Indications (GI) impacting use of common names

• Market-oriented Domestic Policy Reforms in U.S. & EU

‒ EU removal of quotas; U.S. removal of inward focused price support program

‒ Headed in right direction, but upshot is rising share of new consumption from

global markets

Major U.S. Trade Policy Initiatives

• Trans-Pacific Partnership (TPP)

‒ Non-Tariff Barriers

Ground-breaking provisions to tackle

SPS & geographical indications

barriers to trade

‒ Tariffs

Historically restricted markets cracked

further open, albeit modestly

‒ Growth

Prospect for future expansion of

regional agreement a key benefit

Major U.S. Trade Policy Initiatives

• Transatlantic Trade &

Investment Partnership (TTIP)

‒ Non-Tariff Barriers: most difficult

and essential element

• U.S. must see genuine and

predictable access to EU market

• Current dairy trade deficit: $1.4B

− Driven by past discrepancies

in preferential access and

import policies

The U.S. Wild Card: 2017

• Trade a major topic of discussion in U.S. election – mostly critical

• Yet, Republicans traditionally support trade & Clinton has too

Moving Forward…

• Given the challenge facing global agreements, bilateral and

regional deals remain key

‒ Imperatives

• Compliance with existing WTO rules

• Tackle the real-world challenges of SPS & NTBs

• U.S. dairy will continue to advocate for

securing deals we can strongly support

‒ Key goals: Successfully addressing NTBs; tariff elimination is the

goal in principle

‒ Rural votes are essential to approving U.S. FTAs

• Dairy present in all states & among the top 3 ag sectors in almost half

U.S. Views on Trade Policy Issues

Thank You