New Zealand will open trade talks on Monday for a Trans-Pacific Partnership (TPP) with the United States, Brunei, Chile, and Singapore.The TPP would build on the previously negotiated P4 trade agreement between New Zealand, Brunei, Chile, and Singapore.Pr
New Zealand will open trade talks on Monday for a Trans-Pacific Partnership (TPP) with the United States, Brunei, Chile, and Singapore.
The TPP would build on the previously negotiated P4 trade agreement between New Zealand, Brunei, Chile, and Singapore.
Prime Minister John Key has described the TPP as "our most important trade negotiation, working towards a free-trade agreement with the United States".
The Government has already appointed former prime minister and World Trade Organisation (WTO) boss Mike Moore as ambassador to Washington, with instructions that a US free trade deal is a priority.
The first round of negotiations to expand the TPP to include the US, Australia, Peru and Vietnam was to take place a year ago, but the US postponed the first set of talks at the last minute, in the wake of the Obama inauguration.
Now the US is ready to start five days of talks in Melbourne next week.
Free access to the US market has long been a holy grail for New Zealand exporters of meat and milk, but they have already run into warning shots from their rivals in the US, concerned about a potential surge of NZ produce onto their domestic market.
Today, the Wall Street Journal reported US dairy farmers were pleading for protection from Fonterra.
The US farmers were concerned that increased trade within the region could result in NZ flooding the US with cheap dairy products that could depress prices for US producers, the newspaper reported.
Noting New Zealand was "sometimes called the Saudi Arabia of milk", it said the US imported some dairy products from there, "but tariffs effectively limit the amount".
The US uses tariffs and quotas to keep out foreign dairy products -- NZ has a quota of only 151 tonnes of butter a year -- but Fonterra has built a profitable trade in milkpowders, including milk protein concentrates which sell for high prices.
"We're in a bad way already," US dairy farmer Paul Rozwadowski told the newspaper. He milks about 60 cows on his northern Wisconsin farm and said making it easier for NZ to ship dairy products to the US would be "another thing that's just going to hurt us".
US dairy farmers are just beginning to recover from nearly two years of severe losses and commodity-price swings, with the help of taxpayer-funded subsidies last year.
No comment was immediately available from Fonterra, but it has previously said successful talks could produce "a major breakthrough in international trade policy".
US farmers fear Fonterra's cooperative structure and control of about 88 percent of New Zealand's milkflows would help it undercut them on price.
The National Milk Producers Federation's vice president of trade policy, Shawna Morris, told the newspaper that Fonterra was "a powerhouse within the global dairy industry with the ability to significantly sway US as well as world dairy market dynamics".
Recent analysis by the federation concluded additional dairy imports from NZ would result in US dairy producers losing a cumulative $US20 billion ($NZ28.6b) in revenue over 10 years.
But a professor of agricultural economics at the University of California, Davis, Daniel Sumner said the US farmers' worries were overblown.
Prof Sumner, who has previously worked for the NZ dairy industry, said more NZ dairy products entering the US would put some downward pressure on dairy prices there, but the wider economy would make gains through increased trade in other industries.
