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  • 9 Shared Priorities of U.S. and Mexico Dairy

    By USDEC September 1, 2017


    As the second round of NAFTA modernization talks begin today, the U.S. and Mexican dairy industries are united on a set of nine common priorities. They include a renegotiated NAFTA that puts an end to Canada's Class 7 milk pricing scheme.

    Dairy leaders from the United States and Mexico issued a joint statement on their priorities after a second annual summit of the August 24 United States-Mexico Dairy Alliance, in Guadalajara, Mexico. 

    The two dairy industries want government officials gathered in Mexico City today through Tuesday to consider their common concerns as they attempt to hammer out terms of a new North American Free Trade Agreement (NAFTA).

    U.S. Dairy Export Council CEO and President Tom Vilsack attended the meeting in Guadalajara last week and was encouraged by a spirit of growing collaboration and partnership with Mexico's dairy industry. 

    "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,” said Vilsack. “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.”

    In February, Canada implemented a special milk Class 7 pricing policy that artificially lowers milk ingredient prices for Canadian processors and is designed to push excess Canadian proteins out onto world markets at below-market prices, while at the same time incentivizing the substitution of domestic Canadian dairy ingredients for imported ingredients.

    The result of this policy was the widely reported cancellation of purchases by Canadian cheese makers of U.S.-sourced ultra-filtered (UF) milk in the first quarter of this year, and the even more damaging ability of Canadian exporters to sell milk proteins globally at a much lower price, thereby undercutting exports from the U.S. and the other countries. It is due to this latter impact that dairy groups in multiple countries have been expressing opposition to Canada’s new system.

    In an interview with RFD-TV, a cable channel owned by Rural Media Group, Vilsack provided more details about last week's U.S.-Mexico dairy summit and the harmful effects of Canada's Class 7 pricing policy (see video below). 

    Dairy leaders from both countries agreed to work collaboratively on these nine priorities: 

     1.  NAFTA: Support efforts to modernize NAFTA in recognition of the benefits it has generated for both countries, and seek avenues to improve commercial trade that currently exists among the three countries by ensuring the free flow of dairy products and eliminating any possible trade barriers.

    2.  Market Access: Commit to working jointly to preserve existing market access opportunities between Mexico and the United States, and improve them where possible to benefit both milk sectors.

    3.  Canada: Strongly urge our respective governments to seek the full inclusion of Canada’s dairy trade provisions within the North American Free Trade Agreement, and express to our respective governments our concerns regarding Canada’s new milk pricing scheme which could significantly harm milk producers and processors in both Mexico and the United States of America.

    4.  GIs: Agree to continue working to defend generic “common” food names, especially with regard to bilateral trade agreements of both countries with the European Union. In conjunction with the pertinent authorities, we will work together to defend common food names in legal texts regarding “geographic Indications” in order to safeguard at all times the free production and marketing of products that are listed under said category.

    5.  Grade A milk standard: Establish a working group to analyze the implementation of the U.S. Grade A milk standard with the goal of developing a course of action to ensure that existing regulations are applied uniformly to the industries of both nations. It was also agreed to draft a joint letter directed to the regulatory agencies regarding this subject. The U.S. group offered to collaborate in technical assistance to increase knowledge and understanding of the Grade A process.

    6.  Raw milk: To facilitate trade of raw milk for processing purposes between both countries, a working group will be established to analyze and recommend measures to the respective governments to resolve this issue on the basis of sanitary and scientific standards.

    7.  Information exchange: Continue to exchange information on developments in the milk sector in both countries, as well as on international milk and milk product markets.

    8.  Technology and training: Work to strengthen cooperation in terms of technological exchange and training in aspects covering farm milk production as well as on milk quality and nutritional information.

    9.  Increasing demand: Work jointly to promote increased milk and milk products consumption in Mexico, optimizing the positive experience of the U.S. dairy industry. Such efforts will include social network management and information exchange on research regarding dairy’s contributions to improving health, seeking to strengthen and diversify promotional actions, particularly those addressing the nutrition and health sector.

    Jim Mulhern, president and CEO of NMPF, considered the meeting an unqualified success and a continuation of a mutually beneficial trade partnership.

    "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," said Mulhern.

    For a fuller account of the meeting of the United States-Mexico Dairy Alliance, click on the image below to read an USDEC news release.

    Mexico summit-1.jpg

    Mark O'Keefe is vice president of editorial services at the U.S. Dairy Export Council.

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    The U.S. Dairy Export Council fosters collaborative industry partnerships with processors, trading companies and others to enhance global demand for U.S. dairy products and ingredients. USDEC is primarily supported by Dairy Management Inc. through the dairy farmer checkoff. How to republish this post.  

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