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NMPF Urges USTR to Hold India, Indonesia Accountable

July 5, 2018

India and Indonesia are using policy tools to impact market access for American dairy producers, and because of this, should not receive trade benefits under the U.S. Generalized System of Preferences (GSP), according to testimony last month from NMPF’s Shawna Morris before the U.S. Trade Representative (USTR).

Speaking on behalf of NMPF and the U.S. Dairy Export Council (USDEC) on June 19, Morris recommended that USTR ask President Donald Trump to suspend GSP benefits that would allow in certain products duty-free to participants in the program. India, she said, has a 14-year record of using unscientific sanitary and phytosanitary requirements to erect barriers to dairy trade in a way that fails to comply with the GSP program’s congressionally mandated requirements.

“In practice, [India’s] requirements have created an unjustified impediment to U.S. exports despite extensive and creative efforts spanning three administrations to reopen the market,” she said. “It is unfortunate that India has not chosen over the past 14 years to engage constructively with the U.S. to resolve this issue in full and reopen the market. U.S. dairy products are safely consumed by people in countries all around the world and we would very much like to offer the people of India the choice to consume our products, as well.”

In 2003, India introduced new requirements for the government-issued health certificates that must accompany dairy imports. The United States has pursued resolution of one challenge after another in the hopes of re-opening access to India for U.S. dairy products. Those efforts included data, evidence and solution-based proposals to work through each topic, but the market remains closed to most U.S. dairy products due to continued intransigence by India on certain animal feeding provisions that go well beyond international guidance.

During the day-long hearing on various countries’ GSP standing, Morris also testified on one of the dairy industry’s most important export markets in Southeast Asia: Indonesia. Indonesia has long been a strong U.S. trading partner. In 2017, the United States exported $133 million in dairy products to Indonesia. It has been the third-largest market for skim milk powder and is a top-10 U.S. dairy export market. But new local content policies for dairy are intended to curtail imports from a variety of sources, including the United States.

In 2017, the Indonesian Ministry of Agriculture issued a new regulation that required local milk processors to procure locally-produced milk or invest in ways to support the local dairy farming sector. Businesses that only import, and do not have manufacturing facilities in Indonesia, are also required to enter into agreements to provide support to or promote the local dairy industry. U.S. companies have reported being required to submit such “partnership plans” to be assured of access to import licenses in 2018.

The United States has been working extensively since 2017 to convey concerns about the policy to Indonesia. To date, however, Indonesia has not yet agreed to change course. “We are spotlighting our concerns here today through this process in the hopes of preserving what has long been a positive relationship on dairy trade, rather than allowing a deterioration of that dynamic,” Morris said.