U.S. Dairy has “Big Wide World” of Trade Opportunity, NMPF’s Morris Says

All of agriculture will benefit from U.S. insistence that trade agreements be enforced, even as dairy seeks export opportunities around the globe, says Shawna Morris, NMPF’s Senior Vice President for Trade. 

“Having the willingness to be able to go ahead and enforce what's needed when it becomes clear that, that's what's required, we think sets a good tone,” said Morris in a Dairy Defined podcast released today, referring to the U.S. Trade Representative’s recent decision to pursue a dispute settlement over Canadian practices related to the USMCA trade deal. 

Meanwhile, even as existing agreements need enforcement, new deals must be pursued, she said. “One of the biggest things that's on our radar is simply the drum beat about the importance of pursuing new market opportunities,” she said. “USMCA is a piece of that. We want to make sure the market opportunities we got in that agreement just last year, we maximize, but it's a big wide world out there.”

Transcript

Alan Bjerga, NMPF: Hello, and welcome to the Dairy Defined Podcast. Shawna Morris has seen the rise of the US in global dairy trade in her 18 years at the National Milk Producers Federation. Where, as it Senior Vice President for Trade, she's leading the organization's trade initiatives, working in concert with the US Dairy Export Council. That rise right now is record-breaking. Volumes are at all time highs and set to increase as global consumers discover and grow accustomed to the benefits of high quality, reliable US dairy. And it couldn't come at a better time. When conversations about the global food system are at the forefront of United Nations discussion and US dairy reaffirms its commitment to serving the global marketplace. Thank you for being here.

Shawna Morris, NMPF: Thanks for having me.

Alan Bjerga, NMPF: It's been a challenging year for dairy, Shawna. The COVID crisis has presented a lot of challenges to dairy producers, but it's also presented some opportunities. Could you walk us through some of what we've seen?

Shawna Morris, NMPF: I'd say on the trade front, what's been surprising and frankly, reassuring throughout a lot of this COVID period has really been, as you mentioned, how well trade has held up. When all of this was starting a year plus ago, a big worry was what the impact on global markets were going to be. Whether a lot of our exports would begin to grind to a halt, as other countries tossed up barriers to trade, happily we didn't see that. And in fact, US dairy exports played a really key role in helping meet food security needs in other markets, places that really rely on our products to keep their people fed. That happens not just here at home, but in a lot of places around the world as well. Because those doors stayed open, because our exporters kept ensuring the product continued to flow, we were able to meet not just customer needs in America, but in a lot of those foreign markets too.

Alan Bjerga, NMPF: And of course we'd love it if this competition at which the US is excelling, were happening in a free and fair marketplace. Could you tell us a little bit about what are some of the challenges we're seeing right now, even as US market share expands?

Shawna Morris, NMPF: The challenges are always out there and unfortunately always plentiful, I'd say. One of the big challenges our exporters' are dealing with has been the crisis through some of our ports. The fact that there is such a backlog of ability to get product out the door smoothly and increased costs that exporters' are having to pay to export their products, has been having a significant impact and one that's beginning to show up in trade flows. But certainly one that the US Dairy Export Councils foreign offices are reporting that they're hearing on the customer side. So I'd say that's one thing on the commercial side of it.

And then of course, we're always contending with a host of different challenges exporting into various markets. A couple of those are closer to home in the Canadian situation, for instance, Canada, playing games with its US-Mexico-Canada agreement commitments. There were actions taken just last month by the US Trade Representatives Office to begin to tackle that problem with Canada and defend our export access rights into that market. But that will of course take a little bit of time to play out as those enforcement efforts move through a process.

On a couple of other fronts, we're working to preserve access into key markets such as Mexico and the European Union, as they've gone through various regulatory changes. So issues that are certainly never easy to grapple with, but particularly now, given all the stresses farmers are facing over the past year and still contending with, we want to ensure that all of those opportunities remain open.

Alan Bjerga, NMPF: Canada is always such a challenge.

Shawna Morris, NMPF: It absolutely is. Which is why, frankly, when USMCA was passed, and just a few months later, we saw game-playing by Canada in how it was actually handling its dairy market access commitments, it was no surprise. We've always seen challenges with Canada trying to bend the rules and skirt around the edges of what they're supposed to be doing in the dairy trade space, in ways that are specifically intended to negatively impact imports. And a lot of the time US exporters' are the ones and US farmers for that matter have been the ones on the short end of that stick.

With Canada and USMCA, one of the biggest concerns had been how they've administered their tariff rate quotas. Essentially the access that the US got into the Canadian market for things like butter, cheese, milk, milk powder, in ways that gave the lion's share of that new access opportunity to Canadian processors and cut out others along the supply chain.

Alan Bjerga, NMPF: Now this request for consultation seeks to review measures adopted by Canada, that, and I'm quoting here, "Undermine the ability of American dairy exporters to sell a wide range of products to Canadian consumers." But this is really about much more than dairy.

Shawna Morris, NMPF: Absolutely. And I'd say that's in particular the case because of where we're at right now. With the transition of the still newish administration and the broader landscape of trying to parse out, where is the Biden Harris administration really headed on trade. What we saw with USTR's decision to move forward with USMCA enforcement against Canada on dairy was certainly a win for dairy in defending our market access rights, but more broadly, a wind for agriculture as a whole. The fact that the administration is willing to go to the mat and insist that other countries meet their obligations in the agriculture trade space, we think is really positive signal to be sent, not just to the Canadians, but to all of our trading partners.

Alan Bjerga, NMPF: Dairy's fight is everyone's fight.

Shawna Morris, NMPF: I mentioned earlier, a lot of the problems we're contending with in other markets, other ag sectors are too for that matter. So having the willingness to be able to go ahead and enforce what's needed when it becomes clear that, that's what's required, we think sets a good tone for a lot of those other issues and a lot of those other markets, as well.

Alan Bjerga, NMPF: So that's thinking globally and looking north. Now let's look south. Mexico, tell us about that.

Shawna Morris, NMPF: They're at a really different point in the process. On the Canadian side, it was crystal clear. Here's the commitment, here's what the Canadians did. They're black and white opposite each other. Clearly that requires enforcement, now. On the Mexican side, what we've really been contending with has been a huge surge in regulatory changes across a number of different dairy products. But frankly, the issues that we're dealing with in terms of regulatory flux in Mexico, aren't a dairy only problem. A lot of other ag sectors are dealing with regulatory changes.

Alan Bjerga, NMPF: What are some examples?

Shawna Morris, NMPF: A good example of one of those that's been problematic, especially as we've worked together with the Dairy Export Councils regulatory team and Mexican office to dig into the details, has been a cheese conformity assessment process that Mexico proposed. So basically how do they ensure that people exporting cheese to Mexico are complying with their cheese standard and their cheese regulation. Fine in process, obviously here at National Milk, we're a big fan of ensuring that people are complying with cheese standards, such as the ones that we have here in the US.

But in practice, there's definitely a way to do that, that makes it a lot more onerous on exporters' shipping into the Mexican market and a lot more costly and complicated to do so. And that's part and parcel of what Mexico had proposed doing. That's for now, been tossed back to the drawing board, but we certainly expect that to come back around. We're hopeful that a lot of the work that we've done with the US government over the past year or so in particular, means that when it gets re proposed in a new and improved form, that it actually will be better and the concerns about trade that we've flagged throughout this process will have been addressed.

Alan Bjerga, NMPF: There's a lot going on besides USMCA. A lot of opportunities. They may not be as prominent, but they're very much on your radar. Tell us what's on your radar right now.

Shawna Morris, NMPF: I'd say one of the biggest things that's on our radar is simply the drum beat about the importance of pursuing new market opportunity. As you mentioned, USMCA is a piece of that. We want to make sure the market opportunities we got in that agreement just last year, we maximize, but it's a big wide world out there. For instance, we've been encouraging the administration to resume and move forward with free trade agreement negotiations with the United Kingdom. They're are really big dairy importing market, but get virtually all of their imports right now from the European Union. European Union has much lower non-tariff hurdles compared to us and has essentially an open door on tariffs, so we're at a huge disadvantage. Closing that gap could open up a lot of opportunity there.

The other area around the world that we're regularly raising with policymakers as an important catch-up zone for us on the free trade agreement front is Asia. Europe and New Zealand have been just going to town in terms of pursuing negotiations with a lot of the countries throughout that region and that's an area where in particular, we're sliding backward by simply standing still. So getting that message across to the administration, that to actually make progress and frankly, even to maintain where we are, we need to be in these markets and pursuing our own agreements, is a big piece of what we're emphasizing.

Alan Bjerga, NMPF: And there's a lot that's just ongoing as well, I'd imagine.

Shawna Morris, NMPF: Another big bucket of issues are simply regular topics that we're trying to address to keep doors open. I talked about a little bit of that in Mexico, but as I mentioned earlier, we're dealing with a major issue in the European Union right now. They rewrote all of their import certificates, the documentation that needs to accompany dairy, meat and other products when it actually arrives at ports in Europe, just last fall. And a lot of those changes, pose significant problems. We've been working extensively with USDEC, with the US government to try to navigate those, press for more time from Europe and more flexibility so that we don't see trade disruptions. Issues like that and others in additional markets are another big slice of where our trade focus is [inaudible 00:10:03].

Alan Bjerga, NMPF: You were talking about sliding back by standing still. That if you simply try to maintain the status quo, the world keeps moving. The world's in an interesting moment right now. We're coming out of the pandemic, we have a new administration, as you noted. At the same time, there's been a lot of change in the global trade landscape and even greater skepticism toward the benefits of global trade itself. But even so, the opportunities are out there. Could you talk a little bit about the importance of pursuing them even when the headwind seems stronger?

Shawna Morris, NMPF: I think the last piece of what you said is definitely where our focus is. That particularly now, when there's a lot more skepticism about whether trade is a good idea or whether the way that we've been doing it is yielding benefits for America, is all the more important for industries like ours that have seen the benefits to weigh in actively and strongly and consistently throughout the process. To say, "Here's what's worked for us." It doesn't need to be a black and white. It's either good or it's bad. I think from our view, frankly, we've taken a lot more nuanced approach to it and said, you don't have inherently bad deals or inherently good ones. You need good negotiations and that's hard work throughout the process, to arrive at a good result. But if you do that, then you can generate real gains for Made in America products and American farmers and manufacturers that are employing people here at home in order to meet the world demand.

So advocating for that, and I'd say that's something that's critically important, not just for us as the trade association and the DC voice for farmers to do, but for our members and farmers across the country to do as well. When there's opportunities for farmers or cooperatives or others to meet with elected officials, elevating the fact that trade is important, that exports have been beneficial to the industry and that we need to see more policies to further encourage those foreign sales, needs to be a critical piece of that discussion.

Alan Bjerga, NMPF: And if you believe in your product and you believe that you're doing a good thing for the world, this is good for the world, as well.

Shawna Morris, NMPF: And that's exactly the message that we've been working to get across to the new team, I'd say. There's still, I'd say a growing level of awareness of what dairy's been doing in the sustainability space. Making quite clear the point that opening more doors for these sustainably produced products is not just good for jobs and Americans here at home in our industry, but is good for the world as a whole, because of the lower environmental and more sustainable footprints related to our product.

Alan Bjerga, NMPF: We've been speaking with Shawna Morris, Senior Vice President for Trade at the National Milk Producers Federation. Shawna, do you have anything to add?

Shawna Morris, NMPF: The last thing I would just add is a huge thank you to all of our members. What we do in the trade space could not be as effective as it is without their robust engagement and partnership with us, particularly when issues are reaching a critical mass and tipping point. We saw that with the way that our industry came together around USMCA enforcement issues, and we see it time and again, when things reach a really fevered pitch on trade topics. And so, so thankful for our cooperatives and dairy farmers for working closely with us in this space.

Alan Bjerga, NMPF: Shawna Morris, thank you for your time.

Shawna Morris, NMPF: Thank you.

Alan Bjerga, NMPF: And that's it for today's podcast. For more on NMPF trade activities, go to the trade policy icon on our homepage at npf.org. To learn more about the US Dairy Export Council, including rich data resources and an up to the minute blog on trade developments, visit usdec.org, commonly called USDEC. Also, Shawna is an author today. If you get Hoard's Dairyman Intel reports, she has a piece on dairy trade today that's written along with NMPF Executive Vice President Jaime Castaneda. And for more of The Dairy Defined Podcast, this podcast is on Apple Podcasts, Spotify, SoundCloud, and Google Play under the podcast name, Dairy Defined. Thank you for joining us.