US and European dairy groups at odds over EU-Mexico trade deal

European dairy organizations are hailing the deal as a great export opportunity, however, in the US, which is renegotiating the North American Free Trade Agreement (NAFTA) with Mexico and Canada, the news hasn’t been so well received.

EU Commissioner for Trade Cecilia Malmström, EU Commissioner for Agriculture Phil Hogan and Secretary of the Economy of Mexico Guajardo Villarreal announced on Saturday April 21 the conclusion of an agreement in principle on trade and investment between the EU and Mexico.

The European Dairy Association (EDA) said it welcomed the conclusion of the deal.

“The dedication of EU Commissioner for Trade Cecilia Malmström and EU Commissioner for Agriculture Phil Hogan in promoting trade has been clearly shown since the beginning of these re-negotiations with Mexico,”​ EDA secretary general Alexander Anton said.

“The 2000 agreement did not include agriculture products. We already see that this new agreement will grant us better market access.”​

The previous agreement with Mexico did not include market access for agricultural products. Dairy products are generally subject to high tariffs when exported from the EU, with up to 60% duty on some cheeses and powders.

At the same time Mexico grants the US favorable access to its market for dairy products as part of the NAFTA agreement, and to Chile under the Mexico-Chilean FTA agreement.

Trade report

To tie in with the deal, the EDA also published its Dairy Trade Focus on Mexico​ report, showcasing the dairy industry in Mexico and the EU.

Both industries have increased their milk production between 2010-2016. Mexico is 82% self-sufficient in dairy products, and the EDA believes this will lead to solid potential for increased export to Mexico.

“Our EDA Dairy Trade Focus is highlighting some details of the EU and Mexican Dairy Industry and their importance in trade negotiations,”​ Anton said.

“We hope that the technical details will be finalized swiftly and be positive for the dairy sector to fully take advantage of this better market access.”​

Different perspective

Reaction from the US dairy industry was not so appreciative, saying that Mexico had failed its consumers.

The U.S. Dairy Export Council (USDEC) said Mexico appears poised to enact new restrictions on the use of what it considers to be common cheese names such as Parmesan, Munster and Feta for products sold in Mexico.

The EU obtained exclusive rights for 340 GIs (geographical indications) in the Mexico trade agreement.

USDEC said the deal runs counter to existing trade agreements with the US.

It said early information on the EU-Mexico deal indicates Mexico will force cheese marketers from Mexico and the US to phase out the use of some generic names, which it said yields to “the EU’s desire to monopolize those cheese markets.”

Secretary Tom Vilsack, president and CEO of USDEC, said, “We are deeply disappointed that Mexico has limited US access by restricting the use of common food names that have been used in the Mexican market for years. ​

“This undermines the rule of law and the value of the market access terms the US has long had in place with Mexico. ​

“While we are pleased that Mexico did not go so far as to grant full market access to the EU for dairy products, Mexico is essentially back-tracking on its mantra of ‘doing no harm’ in the NAFTA context. We hope as the details are hammered out that Mexico carefully weighs the impact of its remaining decisions pertaining to geographical indications and common names.”​

Fewer opportunities for US products

USDEC said Gorgonzola, Asiago, Fontina and Neufchatel also appear to be slated for future restrictions despite what it argues is the long-standing generic use of the names in Mexico.

Jim Mulhern, president and CEO of the National Milk Producers Federation (NMPF), said the US government needs to do even more to ensure that “a bad situation doesn’t become even worse as the final details of the agreement are ironed out.”

“It is deeply frustrating for US farmers and food manufacturers that the US government has not been able to persuade our closest allies—those in the NAFTA region—to simply honor their existing trade commitments to us,”​ Mulhern said.

“This means that our exporters now face fewer opportunities for their products, and trading partners are emboldened to see how much further they can push the boundaries of creating nontariff trade barriers.”​

Jaime Castaneda, executive director of the Consortium for Common Food Names (CCFN), said the organization is committed to using all legal avenues to continue its work to combat the market restricting impacts of the EU’s efforts.

“We are hopeful that the Mexican Congress recognizes that this rogue approach to GIs policy is bad for consumers and ultimately benefits a handful of European producers at the expense of Mexico’s own industry,”​ Castaneda said.