Jaime Castaneda is a senior vice president at the National Milk Producers Federation in Arlington, Virginia, and handles international trade and global strategy for both the Milk Producers and for the U.S. Dairy Export Council.  At last Thursday's GBD-Chamber of Commerce event on TPP and Dairy, The TPP Milkshake, Mr. Castaneda was the first speaker.  Market access in Japan, however, was not the first thing he talked about. 

The Bush Administration laid the groundwork for U.S. participation in TPP in 2008, and the Obama Administration picked up the thread in 2009.   In the early years of those negotiations the U.S. dairy sector did not see a lot of opportunity for new market access.  At the time, the U.S. had free trade agreements with all but two of the TPP countries, namely, New Zealand and Brunei, and neither of those is a promising export market for the U.S.  New Zealand is itself the world's largest exporter of dairy products and Brunei is simply not a very big market.

And so the U.S. dairy industry focused on other TPP issues, in particular SPS and GIs.  Important as they may be for human and animal health, sanitary and phytosanitary (SPS) rules are frequently used as trade barriers, and American producers saw an opportunity in TPP to tighten the disciplines governing their use.

GIs, or geographical indications, represent a system of assigning exclusive labeling rights to specified products associated with specified place names.  As Mr. Castaneda put it,

On Market Access.  GIs and SPS issues are still very much part of the TPP agenda, but market access took on a new importance in June 2012, when it was announced that Mexico and Canada would be joining the TPP negotiations.  Canada is the key country here.  As Mr. Castaneda explained, trade in dairy products between Mexico and the United States was liberalized under NAFTA.  Dairy, however, was not on the table during the negotiations of the 1988 Canada-U.S. Free Trade Agreement that preceded NAFTA. 

When Japan joined the TPP talks last April, the market access issue became even more important.  Now there were two major TPP economies with major limitations on dairy imports, and for some that issue is now a litmus test.  Last   Thursday, Mr. Castaneda put it this way:

As for his comment about things being lost in translation, it was a reference to a disconnect between the expectations of American agricultural producers on the one hand and Japan's Ministry of Agriculture, Forestry and Fisheries or MAFF on the other.  U.S. producers assumed Japan's participation meant that all products would be on the table,  but then, Mr. Castaneda said, he was visited by MAFF officials who explained that no, the so-called sacred sectors of rice, wheat, beef and poultry, dairy, and sugar would remain largely closed. 

Yes, there were qualifications.  In response to one question, Mr. Cataneda said:

It may be paramount, but the market access imperative wasn't the only TPP alarm bell Jaime Castaneda rang last week.  The need to conclude the TPP agreement was another strong theme.  "We've got to finish this," he said.  He continued:

Mr. Castaneda's presentation was the first of three.  We will focus on the other two in later entries.  Here it is enough to note that the second of the three, given by Fiona Hutchinson of Fonterra, zeroed in on the dramatic changes taking place in global dairy markets.  In China and India, for example, demand for dairy is outpacing supply by wide margins.  The slides she used to illustrate that point are compelling, and we have posted them on the GBD website.

Finally, Michael Grant's presentation on Canada's supply management system may have had an unintended consequence.  Mr. Grant is with the Conference Board of Canada, and the paper he discussed highlights the benefits Canada could reap from changing its current supply management system and suggests how reform might be accomplished.  Mr. Grant made both of those points very effectively.  Perhaps inadvertently, he also showed how much heavy lifting Canadian politicians would need to do to meet U.S. demands for a more open dairy market.

And, at least for the moment, they don't seem inclined to do it.  Earlier this week, for example, Canada's Minister of Agriculture Gerry Ritz referred to the United States as a "schoolyard bully" in an interview with Reuters.  In the same interview, Mr. Ritz said he sees more promise in a Canada-Japan bilateral than he does in TPP.  And he cited the absence of Trade Promotion Authority in the U.S. as another reason to be skeptical about an early conclusion to TPP.

On June 19, 2014, GBD will host a speech by The Hon. Dave Camp Chairman of the House Committee on Ways and Means on the Topic The Trade Agenda Starts with TPA: The Only Road to Getting The Best Trade Deals for America.  Registration for this event will open at 9 a.m.  Click the link above for registration and other details.  We look forward to seeing you next Thursday.