October 6, 2015

The recent conclusion of the Trans Pacific Partnership (TPP) agreement in Atlanta, US, was a small but significant step forward for the dairy sector, said John Wilson, the chairman of Fonterra Co-operative Group Limited.

However, he expressed disappointment that the deal "falls far short" of earlier expectations to abrogate all tariffs even as  New Zealand's dairy exporters stand to gain some grounds in main TPP markets including the US, Canada and Japan.

"TPP has been an enormous undertaking… While the dairy outcome is far from perfect, we appreciate the significant effort made by (minister of trade) Tim Groser and his negotiators to get some gains in market access for our farmers," Wilson commented.

"Dairy has been very hard to resolve and New Zealand has managed to get some progress against the odds. Our team has done well to lift the deal from where it stood at the Ministerial meeting in Maui."

Part of the challenge in obtaining market access stemmed from a steadfast Canada that sought to keep access to its local dairy and poultry markets limited. Moreover, the latest TPP outcome could affect sentiments of rural voters in light of an upcoming federal elections in the country.

Following five years of contentious negotiations, TPP is historically the biggest trade deal to be sealed in decades and covers about 40% of the global economy, the BBC reported.

The agreement slashes trade tariffs and establishes common standards in trade for 12 Pacific Rim nations, including the US and Japan. Still, despite the latest breakthrough, it will be subjected to individual scrutiny by every governments of countries involved.

"This partnership levels the playing field for our farmers, ranchers, and manufacturers by eliminating more than 18,000 taxes that various countries put on our products," said US President Barack Obama, on the deal's impact on the American economy.

He also referred to China's absence from the TPP. "When more than 95% of our potential customers live outside our borders, we can't let countries like China write the rules of the global economy. We should write those rules, opening new markets to American products while setting high standards for protecting workers and preserving our environment."

 
Mr Wilson said that the entrenched protectionism demonstrated by the US dairy industry in particular had ensured that the deal on dairy failed to reach its potential.