A new study claims that New Zealand's dairy industry will continue to grow in the Asian-Pacific market, instead of competing in Europe or the Americas.
In The Role of International Trade in the Rise of the New Zealand Dairy Industry from its Beginnings to the Fonterra Era, author Bruce Muirhead traces the rise of New Zealand’s dairy industry, including the mega-cooperative Fonterra, and examines how it will overcome future challenges and competition.
Muirhead says that New Zealand's dairy exports are not dependent upon European or American markets. While New Zealand is a party to the Trans-Pacific Partnership trade agreement talks, and would require the successful completion of the negotiations in order to enter the U.S. dairy market, New Zealand does not appear to need it.
New Zealand exports to many countries in the Asia-Pacific region, including China and India. New Zealand has signed a free trade agreement with the Association of Southeast Asian Nations and Australia, an economic partnership with Hong Kong, and a different agreement with Taiwan. New Zealand will also participate in negotiations creating the Regional Comprehensive Economic Partnership. The paper states that New Zealand is increasingly uninterested in the Western markets.
He explains that if other countries have a viable domestic dairy industry, "they are unwilling to consider competition with Fonterra because they cannot do so effectively without the use of government programs involving subsidies or tariff rate quotas, which block much of a national market through the use of very high tariffs once a certain threshold of imports has been reached."
New Zealand's dairy export success is attributed to Fonterra. In the paper, Muirhead says that "all countries with pretensions to a dairy industry, including the European Union and the United States, have balked at undertaking serious trade liberalization negotiations in the sector with New Zealand. (Fonterra) is perceived to be too efficient."
The paper concludes that "it will be left to the likes of DairyAmerica and its increasingly focused export crusade to East Asia to put dents into Fonterra’s ambitions, presumably with the help of the US government."
The paper is published by the Centre for International Governance Innovation, an independent, non-partisan think tank on international governance based in Waterloo, Ontario.
—Summarized by Progressive Dairyman staff from the Centre for International Governance Innovation news release
