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<p class=MsoNormal><font size=3 face="Trebuchet MS"><span style='font-size:
12.0pt;font-family:"Trebuchet MS"'>March 11, 2010 <br>
<br>
The Honorable Ron Kirk <br>
United States Trade Representative <br>
<st1:address w:st="on"><st1:Street w:st="on">600 17th Street NW</st1:Street> <br>
<st1:City w:st="on">Washington</st1:City>, <st1:State w:st="on">DC</st1:State> <st1:PostalCode
w:st="on">20508</st1:PostalCode></st1:address> <br>
<br>
Dear Ambassador Kirk, <br>
<br>
We understand that the first meeting of the Trans-Pacific Partnership (TPP)
Agreement will be held later this month. We write to urge very careful
attention to dairy trade concerns in these negotiations. <br>
<br>
As you prepare for these negotiations, we wanted to highlight the potential
impact of such an agreement on dairy farmers and many processors in the <st1:place
w:st="on"><st1:country-region w:st="on">U.S.</st1:country-region></st1:place>
if U.S.-New Zealand dairy trade is not addressed properly. We have been
informed that losses to <st1:country-region w:st="on">U.S.</st1:country-region>
dairy producers may total up to $20 billion over the first decade of the
agreement if <st1:country-region w:st="on">U.S.</st1:country-region> dairy restrictions
on exports from <st1:place w:st="on"><st1:country-region w:st="on">New Zealand</st1:country-region></st1:place>
are fully phased out in the TPP. Moreover, <st1:country-region w:st="on">America</st1:country-region>’s
dairy exporters do not have the prospect of focusing on other significant new
opportunities that the agreement would open up given that most other TPP
participants are already <st1:place w:st="on"><st1:country-region w:st="on">U.S.</st1:country-region></st1:place>
free trade agreement (FTA) partners or have relatively limited tariffs and
offer only small additional market opportunities. <br>
<br>
Despite <st1:place w:st="on"><st1:country-region w:st="on">New Zealand</st1:country-region></st1:place>’s
small size, its dairy industry is a global power. New <st1:place w:st="on">Zealand</st1:place>’s
dairy industry is dominated by one company that operates as a virtual monopoly
in controlling more than 90 percent of the country’ milk production and
approximately 40 percent of trade in key internationally traded dairy
commodities. In light of this market power, the Administration should consider
whether genuine competition is possible as it proceeds with the TPP. <br>
<br>
<st1:country-region w:st="on">New Zealand</st1:country-region> has demonstrated
its capacity to funnel product to the <st1:country-region w:st="on">U.S.</st1:country-region>
market as evidenced by the sizable quantities of milk protein concentrates
(MPCs) and casein imported each year into the <st1:country-region w:st="on">U.S.</st1:country-region>
from <st1:place w:st="on"><st1:country-region w:st="on">New Zealand</st1:country-region></st1:place>.
MPC and casein imports enter the <st1:place w:st="on"><st1:country-region
w:st="on">U.S.</st1:country-region></st1:place> virtually tariff-free and with
no volume quotas unlike imported nonfat dry milk, butterfat or most cheeses.
The primacy that <st1:country-region w:st="on">New Zealand</st1:country-region>
assigns the <st1:country-region w:st="on">U.S.</st1:country-region> market and
its ability to devote considerable amounts of its production to exports to the <st1:place
w:st="on"><st1:country-region w:st="on">U.S.</st1:country-region></st1:place>
are clear. <br>
<br>
According to testimony submitted recently to the International Trade
Commission, imports of <st1:country-region w:st="on">New Zealand</st1:country-region>
dairy products facing tariff-rate quota limitations generally account for a
relatively small proportion of <st1:place w:st="on"><st1:country-region w:st="on">New
Zealand</st1:country-region></st1:place>’s total exports of such
products. In contrast, <st1:country-region w:st="on">New Zealand</st1:country-region>’s
sales of MPC and casein imports to the <st1:place w:st="on"><st1:country-region
w:st="on">U.S.</st1:country-region></st1:place> market generally account for
over fifty percent of its exports of these products to all destinations.
Clearly, <st1:country-region w:st="on">New Zealand</st1:country-region> has
taken full advantage of all favorable opportunities to grow its dairy exports
to the high-value <st1:place w:st="on"><st1:country-region w:st="on">United
States</st1:country-region></st1:place> market and would likely do so with
respect to any additional such opportunities for the even higher-valued, currently
tariff rate quota (TRQ)-restricted products if trade in them is expanded under
the TPP. <br>
<br>
Because of the anti-competitive practices in New Zealand’s dairy industry
and the extensive degree of control it wields over world dairy markets to the
detriment of the U.S. dairy industry, we are deeply concerned that an expansion
of U.S.-New Zealand dairy trade would further open the U.S. to these imports
while providing little additional market for American farmers in New Zealand
and the other Pacific countries. This prospect is particularly troubling given
the record low dairy prices American farmers have faced since late 2008 and the
need for our dairy industry to rebuild export markets to help remedy the harm
caused by these low prices. As you proceed with negotiations, we ask that you
carefully consider and discuss with us how best to address within the TPP this
unique threat posing such great potential harm to the future viability of
America’s dairy industry. <br>
<br>
Sincerely, <br>
<br>
Senator Feingold <br>
Senator Crapo <br>
Senator Specter <br>
Senator Bennet <br>
Senator Bingaman <br>
Senator Sherrod Brown <br>
Senator Burris <br>
Senator Cantwell <br>
Senator Casey <br>
Senator Collins <br>
Senator Feinstein <br>
Senator Franken <br>
Senator Gillibrand <br>
Senator Kerry <br>
Senator Klobuchar <br>
Senator Kohl <br>
Senator Leahy <br>
Senator Levin <br>
Senator McCaskill <br>
Senator Merkley <br>
Senator Murray <br>
Senator Risch <br>
Senator Sanders <br>
Senator Schumer <br>
Senator Shaheen <br>
Senator Snowe <br>
Senator Stabenow <br>
Senator Mark Udall <br>
Senator Tom Udall <br>
Senator Wyden<o:p></o:p></span></font></p>
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