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U.S., Mexico dairy industries join forces

Dairy groups make united call to enhance NAFTA free dairy trade while rejecting trade-distorting practices of Canada and EU.

The U.S. and Mexican dairy industries released a unified list of priorities Monday that includes modernizing the North American Free Trade Agreement (NAFTA) to solidify their strong dairy market partnership, and addressing concerns about Canadian and European dairy policies.

A list of nine shared priorities was agreed upon Thursday at a second annual summit meeting in Guadalajara, Mexico, between leaders of the two nations’ dairy industries, collectively called the United States-Mexico Dairy Alliance.

The U.S. dairy industry was represented by the U.S. Dairy Export Council (USDEC) and the National Milk Producers Federation (NMPF). Mexico's dairy producer organizations include the Confederación Nacional de Organizaciones Ganaderas, Gremio de Productores Lechero de la República Mexicana, and the Asociación Nacional de Ganaderos Lecheros, along with processor organization Camara Nacional de Industriales de la Leche.

The summit occurred on the heels of the first round of NAFTA renegotiation talks. As NAFTA talks continue, the European Union is seeking, through direct negotiations with Mexico, to impose new barriers to dairy trade through the abuse of geographical indications. This is a significant concern to U.S. and Mexican cheese makers because it would give the EU exclusive use of common cheese names like asiago, gorgonzola and feta.

Canada is also disrupting dairy trade in North America and beyond as its new Class 6 and 7 pricing scheme dumps artificially low-cost milk powder onto global markets, displacing U.S. exports from the Canadian market.

“We want to strengthen our relationship as Mexico’s most trusted dairy trading partner so we can continue to work together for the benefit of dairy sectors on both sides of the border,” USDEC president and chief executive officer Tom Vilsack said. “That goal is all the more essential given other nations’ efforts to pursue harmful and disruptive approaches to dairy trade with Mexico through practices that hurt Mexican and U.S. dairy farmers and workers in the process.”

Jim Mulhern, president and CEO of NMPF, said, “We are very pleased that our friends in Mexico have joined us in expressing opposition to the abusive attempts of the European Union to confiscate common food names, as well as the trade-distorting practices of Canada, at a time when we are working to facilitate new opportunities throughout North America. This meeting provided an opportunity to explore how we can deepen those efforts.”

Last year, representatives from the two nations’ dairy sectors held a two-day summit in Denver, Colo., that created the United States-Mexico Dairy Alliance. This year, in Guadalajara, the focus was on expanding areas of collaboration while preserving current trade. The NAFTA renegotiation talks emerged as an important topic because the agreement is the foundation of the industries’ mutually beneficial free trade relationship.

Enacted in 1992, NAFTA removed barriers to trade and has led to more than a six-fold increase in U.S. dairy exports to Mexico, which reached $1.2 billion in 2016. Round one of NAFTA modernization talks ended Aug. 20 in Washington, D.C., with a second round scheduled Sept. 1-5 in Mexico City and a third round in Canada in late September.

Vilsack and Mulhern noted that, in contrast to Mexico’s open trade approach, Canada has retained sky-high dairy tariffs and implemented policies that hinder free trade with its North American neighbors. Canada’s Class 6 and 7 pricing policy has drawn strong concerns from both the U.S. and Mexico and was a significant point of discussion at the meeting.

Mulhern noted that Canada's new pricing scheme “intentionally undercuts U.S. dairy protein exports to other world markets and, at the same time, hurts dairy farmers in the U.S., Mexico and around the world by artificially lowering world market prices.”

Members of the United States-Mexico Dairy Alliance agreed to continue to maintain an open channel of communications among the industry organizations as they analyze and seek mutually beneficial solutions to problems affecting the dairy industries of both countries.

Vilsack said the meeting “illustrates how our industries are committed to seeing our relationship continue to flourish and to jointly rejecting unjustified barriers to dairy trade.”

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