A Wolf in Sheep’s Clothing

Among the policy challenges that the new President and the new Congress will inherit next year, along with an anemic economy and the Iraq war, will be the prospect of a potential free trade agreement with New Zealand. We’re going to have to work hard to get the message across to our elected officials to keep dairy out of that deal.

Last month, the Bush Administration announced it would begin negotiations on what it calls a Trans-Pacific Free Trade Agreement. What this TPFTA really is, in fact, is a wolf in sheep’s clothing (while New Zealand may be famously known as two pastoral islands adept at lamb and wool production, the big, bad wolf looming underneath is their very aggressive dairy industry).

There are four nations bordering the Pacific that would obtain free trade status with the United States as part of this agreement. Two, Chile and Singapore, already have FTAs with the U.S., so there is nothing that would change for the better in our trade relationship with those countries. The third, Brunei, is a sultanate of roughly 400,000 people, about the size of Omaha. There’s not much new opportunity with a country that small.

Over the past several years, NMPF has loudly and consistently joined the U.S. Dairy Export Council in leading the charge towards reforming the gross inequities in the world dairy market, as well as supporting the pursuit of fairly-negotiated trade agreements with markets where competition is not only permitted, but a reality.

This agreement that primarily benefits New Zealand, however, in no way fits that bill of providing the opportunity for a fair shot at competition. It’s because of this entirely unfair challenge that we need an equally fair remedy. That’s why NMPF is demanding that all U.S.-New Zealand dairy trade be excluded from the TPFTA.

But even then, saying this pact is about America’s trade partnership with New Zealand is a misnomer. What it would create is an agreement with one company, Fonterra, which controls 95% of New Zealand’s considerable dairy exports. Fonterra, a dairy giant that arose from the ashes of the New Zealand Dairy Board, has a unique role as a state-sanctioned trading enterprise with global reach and enormous clout. No other business in any of the countries involved in the TPFTA would receive the singular benefit from the agreement that it would.

New Zealand’s government has been working hard to create new export opportunities around the globe, particularly through the World Trade Organization. But the WTO talks have foundered for years, and now we are putting the keys to the U.S. candy store on a much smaller bargaining table. Talk about high stakes poker. With easy access to our lucrative consumer market of 300 million dairy consumers, it’s easy to see why New Zealand would view this FTA as a much better prospect than the heavier lifting of trying to get a WTO agreement forged.

At a time when our financial institutions are in a state of free fall and our entire economy on the precipice, the last thing we need is a traumatic meltdown in our dairy institutions. It is inconceivable to me that this type of unfair agreement – which could hurt the second-largest farm sector in the U.S. – is even being considered.

NMPF will be urging our trade negotiators, and our elected officials, to exclude dairy products from a TPFTA. This issue should once again galvanize every dairy producer across our country to stand up and fight this potential injustice. The wolf is at our door, cleverly disguised as the TPFTA. We need to keep it out.

National Milk Producers Federation

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