October 3, 2008 - The United States has entered into negotiations to join a free-trade agreement that would include Brunei, Chile, New Zealand and Singapore, two of which (Chile and Singapore) already have bilateral agreements with the United States.

According to a statement from the Office of the U.S. Trade Representative (USTR), the four nations concluded talks among themselves in 2005 on an agreement to liberalize Asia-Pacific trade. The agreement went into effect in late 2006. Last March, the Trans-Pacific Partnership joined the United States in talks on financial services and investment.

USTR Susan Schwab pointed out that all trade sectors will be subject to negotiations, including dairy products. "We are going to be negotiating all of the things that make up a comprehensive trade agreement," she said. Schwab said she spent "quite a bit of time" with the dairy industry while deciding whether to proceed with the negotiations.

The National Milk Producers Federation (NMPF) says it would seek the full exclusion of New Zealand's dairy products under the newly announced Trans-Pacific free trade agreement "because of the New Zealand dairy industry's unique structure and excessive manipulation of dairy markets globally and in the United States."

NMFP President and CEO Jerry Kozak points out that in New Zealand, "One company controls over 90 percent of the milk produced, owns the rights to the vast majority of the market access granted to New Zealand under the Uruguay Round, and handles 95 percent of that country's exports. The only way to deal with such a unique and monopolistic situation is through an equally unique response: full exclusion of all dairy products."

The monopoly to which Kozak refers is Fonterra, a farmer-owned purchasing and exporting cooperative established in 2001. Fonterra was formed to assist New Zealand dairy producers to market their products following the termination of government dairy subsidies in the mid-1980s. The co-op is owned by approximately 10,000 dairy farmers who collectively produce about 95 percent of New Zealand's milk.
Reprinted in part from The Food and Fiber Letter

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