Dairy Welcomes Trade Progress with China, USMCA

The U.S. dairy industry is applauding President Donald Trump’s signing of a phase one agreement with China, and Senate approval of the U.S.-Mexico-Canada Agreement.

National Milk Producers Federation spokesperson Chris Galen says the agreement with China is a welcome first step, but that Chinese retaliatory tariffs on U.S. dairy products still need to be lifted to spur more exports…

“The big thing is that this will help normalize relations between all of American agriculture and China, which of course is a very important market, regardless of what commodity you’re talking about. I will say, though, for U.S. dairy farmers, there are not a lot of new product purchases by the Chinese expected as part of the phase one deal. So, while we will see some benefit from increased purchases of things like infant formula and whey permeate, there are some other things that I think won’t get resolved until we talk about a phase two deal.”

Galen says that even though Chinese tariffs remain a concern, the new phase one deal does resolve some non-tariff trade obstacles that should  improve dairy trade with China…

“One of the other benefits to dairy farmers from this deal is that it will help tackle product registration and facility registration requirements that have stymied some U.S. dairy companies trying to export U.S. dairy products to China. It will also improve the way that they handle geographic indications and it will prevent China from excluding certain American cheese products because of the issue of common food names. But, there’s still a phase two to come, and I think a lot of the true benefits of a fully normalized relationship with China, will not be realized until we get to a phase two deal with China.”

Meanwhile, the Senate Thursday passed the USMCA. Galen says Canada and Mexico are both top five dairy export markets for the United Sates…

“The benefits for the U.S. dairy sector here are that we will help normalize relations with our number one export market, which is Mexico. And then with respect to Canada, we’re going to help reign in Canada’s controversial dairy pricing system, and get a little bit more market access. Not a huge amount, but some additional market access for U.S. dairy products up in Canada. So, this is very, very important. It was time to Refresh the old NAFTA, now we have the new USCMA. And, once this gets signed by the President and approved by the Canadians, then we will expect to see more export opportunities on both sides of the border for U.S. dairy farmers.”

President Donald Trump is expected to sign USMCA next week.

Galen says both trade with China, and the USMCA, provide optimism for the future…

“The export market is increasingly important to the U.S. Dairy sector, and it’s really a longer-term play. So, I would say that as we get to fully normalized relations with China, and also with other Asian countries, as well as get this USMCA approved by Canada and fully put into place, all those things are going to provide greater stability and greater certainty for U.S. dairy exporters. And, I think that does provide a bit of a tail wind. Not just now here in the next few months, but in the coming years for the entire U.S. dairy sector.”

Learn more online at NMPF.org.