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Canadian Dairy Policy Criticized at Congressional Trade Hearing

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Leaders from several farm groups testified Tuesday before the House Ways & Means Trade Subcommittee about a range of trade barriers and opportunities.

The main focus may have been the prospects for the 12-country Trans-Pacific Partnership, but testimony included everything from criticism over Canadian dairy policy, Cuba, issues with exporting apples and even the challenges exporting craft beer.

Noting the positive aspects of free trade for agriculture, subcommittee Chairman David Reichert, R-Wash., pointed to the Colombia and South Korea free-trade agreements now generating triple-digit growth in exports for some products. Reichert did say he was concerned about World Health Organization attempting to restrict exports on dairy products "that have no basis in science."

Reichert also chided Canada for trying to change its policies to limit dairy imports through regulatory changes

In his testimony, Missouri dairyman Randy Mooney, chairman of the National Milk Producers Federation, called Canada, "without question the worst offender when it comes to erecting measures over the years to create new barriers to trade." Mooney added Canada actively works to constrain dairy imports. Rooney cited restrictions on milk protein concentrates and restrictions on cheese and potentially yogurt processed using ultra-filtered milk. Canada also has tacked on tariffs of more than 200% of pizza products containing mozzarella.

Now Canada is using a milk-pricing mechanism in Ontario meant to limit imports of ultra-filtered milk that could become national which will drive processors to use domestic milk.

"Mr. Chairman and the rest of the committee, we're drawing a line here," Mooney said.

Mooney noted later in his testimony on Canada, "They were late coming to TPP and they don't want to abide by the rules."

Still, dairy is considered one of the big winners in the TPP deal. According to analysis released last month by the U.S. International Trade Commission, U.S. dairy producers would see a net export gain over the next fifteen years of $1.49 billion.

The American Farm Bureau Federation noted Canada would open its market to more U.S. dairy, poultry and eggs. American dairy producers will gain access to 3.25% of the Canadian dairy market over five years. Canada will also allow imports of duty-free U.S. eggs up to 2.3% of domestic production.

Mooney also addressed problems in the U.S.-European Union trade talks over geographical indicators. U.S. ag groups see Europeans throwing up the GI argument as another trade barrier. Mooney had a food basket in front of him when he testified that included U.S. parmesan cheese that had won top honors in a European cheese competition. Still, the EU wants "parmesan" to be restricted as a GI.

"When you are using a name parmesan that has been used here for decades, that's ridiculous to me," Mooney said. "It will have a large economic impact."

Rep. Charlie Rangel, D-N.Y., made a case other Democrats have made recently regarding trade pacts and concern over loss of jobs. He said a trade agreement such as the Trans-Pacific Partnership should come with proposals for infrastructure, education and technology that would help alleviate risks of job losses. He also indicated resistance to TPP in Congress.

"The votes are not there, but I assure there are communities, if they can see a future for their people in education and technology, that they would take a look at it," Rangel said.

John Weber, president of the National Pork Producers Council, told lawmakers his organization is focused on getting TPP passed. Responding to a question about fear of lost manufacturing jobs in urban areas, Weber countered that free-trade agreements are about a willingness to compete.

"You have to be willing to compete. The statistic that sticks out to me is 95% of our global population is outside the country," Weber said. "Are you afraid to compete with them in whatever sector it is -- in pork like I do or manufacturing?"

Rep. Richard Neal, D-Mass., countered that the U.S. has been flooded with Japanese autos in past decades, but Japan has been unwilling to credibly open its market to U.S. autos. Neal expressed similar concern about South Korea.

Kevin Paap, president of the Minnesota Farm Bureau, noted one-third of his soybean production leaves the country so infrastructure for trade is important to farmers as well. He also asked Congress to approve TPP. “Expanding our trade opportunities happens through tariff reduction and removal, and by the adoption of science-based standards for international agricultural and food trade,” said Paap, who also chairs AFBF’s Trade Advisory Committee.

Rangel also championed removing restrictions on exports to Cuba, noting Cuban food is dominated by rice, beans, pork and chicken. "If that's not the U.S., then I don't know what is."

Rep. Charles Boustany, R-La., later cited that one reason U.S. ag exports to Cuban have declined was a restriction on credit transactions that was reestablished in 2000. Boustany said allowing credit-based transactions would start to regain some of the Cuban market.

Mooney responded on Cuba, "The United States ought to own that market as far as agriculture goes. We're so close we ought to own it."

In other agricultural products, Dale Foreman, a Washington state apple grower, cited some of the problems apple exporters face in countries such as Japan. For instance, Foreman noted Japan requires a 55-day cold treatment and methyl bromide fumigation to ship apples there.

"What that really does is it closes out the market because they want to protect Japanese apple growers from competition," he said.

Foreman also pointed to port restrictions in countries such as India, despite demand for the products. Other countries restrict U.S. organic fruit on "trumped up reasons," Foreman said, "because they can't compete with the orchards we have."

Foreman added, "It is an ongoing battle between success and barriers."

The full hearing can be replayed here: https://www.youtube.com/…

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