Fonterra rejects US free trade fears
American lobbyists complaining about the potential for a Trans-Pacific Partnership (TPP) trade treaty to give New Zealand greater access to the United States domestic dairy market have been urged by Fonterra to look at the issue in context.
"The US dairy industry is by far the largest among the TPP countries, producing approximately 70 percent of the milk in the TPP region, while New Zealand produces a little over 13 percent," Kelvin Wickham, Fonterra's managing director of global trade, told NZPA.
Prime Minister John Key said yesterday he did not think that opposition from a group of US senators to a free trade agreement with New Zealand will derail negotiations on the TPP to expand the previously negotiated P4 trade agreement between New Zealand, Brunei, Chile and Singapore to include the US, Australia, Peru and Vietnam.
The group of 30 senators sent a letter to US Trade Representative Ron Kirk saying New Zealand's dairy industry had "anti-competitive practices".
Federated Farmers Dairy chairman Lachlan McKenzie said American dairy farmers were "scared a free trade deal could flood the United States with cheap New Zealand dairy products".
"We're a little island in the bottom of the Pacific and America's scared of us," he said. "It seems a bit strange."
Idaho Dairymen's Association executive director Bob Naerebout told the Idaho State Journal he was concerned that the "monopolised nature" of New Zealand's dairy industry could disrupt competition in the US industry.
The American lobbyists claimed losses to the US industry could total $US20 billion ($NZ28.3b) over the first 10 years of a trade treaty if US restrictions on exports from New Zealand were fully phased out.
Mr Wickham said that while Fonterra was New Zealand's largest company, by US standards its size was unexceptional -- Dairy Farmers of America and Dean Foods were similar in size.
And size had to be considered in terms of the relevant export markets, which for dry milkpowders were global.
Fonterra's exports to America had to compete with both domestic production and imports from other firms, and in the case of non-fat solids sold in the US, Fonterra had a share of only 0.5 percent of consumption.
Fonterra was not only an NZ exporter but also one of the largest milkpowder exporters from the US, through its partnership with domestic dairy co-operatives.
"TPP represents a further opportunity to develop our export trade out of the US in a way which benefits Fonterra and US farmers," Mr Wickham said. Trade deals such as the TPP could boost the free flow of trade around the Asia Pacific, which would be good for all dairy exporters.
There were no government subsidies for New Zealand's farmers and there was no impediment to outside competition in the form of import tariffs, quota restrictions, or investment constraints.