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IDFA writes to USTR detailing how Kenya has allowed EU to dominate Kenya’s dairy market and seeks level playing field.
August 6, 2020
4 Min Read
MEAACT PHOTO / STUART PRICE
In a letter to U.S. Trade Representative Robert Lighthizer regarding trade negotiations between the governments of the U.S. and Kenya, the International Dairy Foods Assn. (IDFA) said a U.S.-Kenya agreement has the potential to provide tangible market access for U.S. food and agricultural exports to Kenya’s growing economy while also cutting into the European Union’s dominance over dairy exports to Kenya and sub-Saharan Africa.
IDFA encouraged the Trump Administration to continue to pursue a trade agreement with the African continent’s seventh-largest economy but voiced its concern for Kenya’s protectionist measures over its dairy sector as well as a host of non-tariff barriers to trade that would limit the competitiveness of U.S. dairy.
In addition, IDFA believes that the government of Kenya has allowed the EU to dominate Kenya’s dairy market. In 2019, the EU enjoyed 81% of the Kenyan market, compared to the U.S. share of less than 1%. The U.S. and Kenya must “work in tandem to achieve a level playing field free of barriers to trade,” IDFA said.
The letter said: “First and foremost, IDFA commends the Administration for embarking on these precedent-setting negotiations, including negotiating objectives that are consistent with or exceed those of the United States-Mexico-Canada Agreement (USMCA). IDFA believes global competitiveness is key to the U.S. dairy industry’s continued growth, and the United States must take a proactive approach in developing market access opportunities that allow U.S. products to compete on a level playing field.
“To that end, with a population of roughly 1.3 billion people, the African continent represents significant market potential for U.S. dairy exports under equitable trade conditions," IDFA added. "With no other full and comprehensive free trade agreement in place in sub-Saharan Africa, the U.S.-Kenya negotiations have the potential to provide tangible market access for U.S. agricultural exporters to a growing economy while also leveling the competitive playing field for dairy exports to Kenya and beyond.”
IDFA vice president for trade policy and international affairs Becky Rasdall said, “IDFA appreciates the Administration’s efforts to unlock new opportunities and regions for the U.S. dairy industry, and we encourage U.S. negotiators to continue pursuit of an agreement with Kenya that liberalizes its markets, ensures comprehensive regulatory reform and delivers gold-standard commitments. IDFA supports the Administration’s goal to reach an agreement with Kenya and urges negotiators to focus on U.S. dairy access throughout the process.”
The letter to USTR highlights three priorities for the U.S. dairy industry in the negotiations with Kenya:
Market access. Push for ambitious tariff reductions, including for protected dairy products in Kenya, while seeking a simplified, trade-facilitative entry of U.S. dairy products into Kenya. Currently, Kenya maintains its highest tariffs on a range of agricultural products, including dairy, at an average of more than 50% because it considers dairy to be “sensitive” products and uses tariffs to stabilize domestic prices.
Sanitary and phytosanitary (SPS) measures. Seek SPS commitments that align with USMCA commitments and that eliminate Kenya’s use of SPS measures to prevent the import of dairy products. For example, the SPS portion of Kenya’s Dairy Industry Import & Export Regulations (ca. 2004, revised in 2012) requires dairy imports to be physically tested for radioactivity and to receive not just one but two pasteurization treatments, among many such requirements. It is imperative that U.S. negotiators ensure that Kenya adopts SPS commitments that are consistent with the World Trade Organization and other more recent agreements concluded by the U.S.
Capacity building and regulatory reform. Pursue good regulatory practices commitments with Kenya, such as those in USMCA and promoted in multilateral fora such as the Asia Pacific Economic Cooperation. IDFA further encouraged U.S. negotiators to undertake robust capacity-building efforts that focus on technical assistance for Kenya’s system of oversight, including regulatory reform, and the adoption and implementation of international guidelines, standards and recommendations, such as those published by Codex Alimentarius.
IDFA noted that the U.S. dairy industry, which supports more than 3 million jobs nationwide and pumps $620 billion into the U.S. economy, relies on trade agreements to open new markets and increase exports. After being a net importer of dairy products a decade ago, the U.S. now claims a dairy trade surplus of more than $2 billion and sends its dairy products to more than 140 countries. U.S. dairy exports have nearly tripled since the early 2000s, and the U.S. has become the world’s third-largest dairy product exporter, behind New Zealand and the EU. Today, approximately one day’s worth of milk production is exported each week, or roughly 15% of all production.
As U.S. milk production continues to increase over the next decade, IDFA said new trade agreements will become even more vital to the industry and the American economy. IDFA advocates for a continued focus on new trade partnerships and pacts. Moreover, IDFA supports a market-principled approach to trade and advocates for the removal of unfair barriers so that U.S. dairy companies can compete on a level playing field.
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