A Meros Consulting study released Wednesday by the U.S. Dairy Export Council projects that the two new trade agreements made by Japan will benefit global dairy suppliers such as the EU and Oceania, while costing the US dairy export industry billions of dollars in lost sales.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) entered into force on Dec 30, 2018 and the Japan-EU Economic Partnership Agreement (JEEPA) went into effect today, February 1st, 2019. All major dairy suppliers to the Japanese market, including Australia, New Zealand, Canada, the Netherlands, Germany, Denmark, Ireland and France, are included in one of these two agreements. Only the United States is missing, after pulling out of TPP negotiations in January, 2017.
Through industry interviews to assess price sensitivity and product substitutability, together with extensive historical data analysis, Meros developed a model to quantify the future economic impact of those agreements on key U.S. dairy products and ingredients over the next two decades. The study showed that the US could double its market share with a level playing field. However, without quick action by the US to regain competitiveness in the market, US dairy exports will be at a strong competitive disadvantage, particularly for cheese, whey and lactose, resulting in lost US sales of $5.4 billion over 21 years.
Now is a particularly critical time for global cheese suppliers to Japan as Japan’s cheese imports are expected to show a 1.6-fold expansion over the next 10 years under CPTPP and JEEPA. As a result, the US dairy industry is supporting further bilateral trade talks with Japan. As USDEC CEO and President Tom Vilsack commented in a January 30th news release, “U.S. dairy farmers and processors strongly support the Administration’s launch of trade talks with Japan. We hope this report provides fresh ammunition to our negotiators about why a strong U.S.-Japan agreement is so important for American agriculture.”
U.S. Dairy Export Council’s release of Meros Consulting’s Analyzing the Impact of the CPTPP and Japan-EU EPA on US Dairy Exports to Japan can be downloaded here: