The International Dairy Foods Association commends President Obama for submitting legislation to Congress that would allow for the implementation of the pending free trade agreements with South Korea, Colombia and Panama. IDFA now urges Congress to pass the agreements quickly, while avoiding additional legislation that could undermine the expected market access gains for the dairy industry.
"We're pleased that the administration recognized the extreme importance of these trade agreements to the U.S. economy, and we now urge swift passage in Congress," said Connie Tipton, IDFA president and CEO. "The pact with South Korea is particularly important, because it would reduce tariffs and expand market opportunities in a high-value market and add 10,000 or more additional U.S. jobs throughout the dairy supply chain."
South Korea is now the U.S. dairy industry's sixth largest export market, representing $145 million in exports year to date. That figure is nearly double the value of exports during the same time period last year. According to U.S. International Trade Commission estimates, full implementation of the agreement with South Korea would increase U.S. dairy exports by as much as $336 million a year.
The Panama and Colombia agreements are also strong for U.S. dairy; they are each expected to produce gains of an additional $25 million in exports per year.
Supply Control Programs Could Derail Anticipated Trade Gains
While encouraging Congress to enact the trade agreements, IDFA warns legislators to steer clear of proposed U.S. dairy policies that could negate the growth opportunities awaiting the dairy industry.
The Bain & Company report, "Dairy Globalization Refresh: 2011 Update," commissioned by Dairy Management Inc. and the U.S. Dairy Export Council and issued in August of this year, reaffirmed that the global demand for dairy products will exceed supply in the near term. The report also said the United States remains uniquely positioned to become a consistent exporter.
"Supply control programs, such as the price stabilization program included in the Dairy Security Act of 2011 recently introduced by Representative Collin Peterson, have the potential to undermine the market access gains of these trade agreements," Tipton explained. "Such programs would increase domestic prices for dairy products well above international levels, weakening our competitive position in the global marketplace and limiting our industry's ability to grow and create more jobs."