Friday, March 29, 2024

Dairy’s big chance came and went

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The failure of the Trans Pacific Partnership to create significant openings in the dairy markets of the United States and Japan is a bitter blow to the industry here.
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It had hoped breakthroughs in access to the markets of the world’s biggest and third-biggest economies respectively would re-introduce pricing tension in global dairy markets hit by the collapse in demand from China and Russia.

But the politics of global trade proved too tough for New Zealand’s negotiators and tariffs of 300-400% for all but a sliver of the Japanese dairy market will remain.

In the US there are some openings in cheese and small-ticket items such as yoghurt but on milk powder tariff elimination has been stretched out to 30 years.

Is there any comeback for NZ on its dud deal on dairy?

The TPP is touted as a stepping stone to a larger agreement encompassing all 21 economies of Asia Pacific Economic Co-operation (APEC) group and is likely to be opened up for renegotiation as more countries join.

It is for that reason the Government had little choice, as former Prime Minister Helen Clark’s 11th-hour intervention last week underlined, but to sign up for the deal now or risk exporters of NZ beef, sheep meat, wine and kiwifruit being left at a competitive disadvantage to rivals from TPP countries who stand ready to take full advantage of tariff reductions in an increasing number of markets as more countries sign on.

It is difficult to spot countries with the same interests in dairy as NZ who would lend their weight to calls for meaningful improvements in access to the consumer markets of the US and Japan from the line-up of those wanting to join TPP.

The reality is that while NZ never held the whip hand over its larger TPP negotiating partners its leverage over them was at its maximum right now.

The 11 other countries in the talks were desperate to do a deal before elections in the US and Canada changed the political landscape again and potentially left TPP without the support it needed to be ratified by lawmakers in those countries.

NZ dairy's big chance has come and gone.

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