Free Is the Important Part of 'Free Trade'; Pandering to Special Interests Undermines Economic Growth
Byline: Sallie James, SPECIAL TO THE WASHINGTON TIMES
United States Trade Representative Ron Kirk, speaking recently to the House Dairy Caucus, threw out the trade-negotiating handbook when he assured U.S. dairy producers that the USTR has their back.
His signal to a powerful interest group that the Trans-Pacific Partnership (TPP) may be an opportunity to increase trade barriers will further fuel the skepticism with which free-trade proponents greeted the Obama administration's announcement late last year that it would formally enter into negotiations to join a new Asia-Pacific trade bloc even as other, more economically significant agreements waited in the wings.
Mr. Kirk rightly refused to take U.S. barriers to dairy completely off the negotiating table, as the producer lobbyists wanted, and he pointed to the need for the U.S. dairy industry to be more competitive. At one point, however, he justified keeping the trade barriers as part of the talks in a manner that is not often associated with free trade negotiations. He reportedly said he saw an opportunity to use the negotiations to rationalize things and introduce new quotas on a certain class of dairy product that has been making serious inroads into the domestic market in recent years.
The products in contention are milk-protein concentrates. MPCs, used often in cheese and other processed dairy foods, are made when milk is ultrafiltered, draining out the lactose and leaving the protein and other large molecules as a powder. (Milk-protein concentrate also can be made by blending nonfat dry milk with concentrated proteins, although that technology is increasingly obsolete.)
The U.S. dairy lobby is concerned because while high tariff quotas protect them from competition in most tradable dairy products, such as nonfat dry milk, milk-protein concentrates are not subject to quotas. The U.S. dairy lobby has become increasingly concerned that MPCs made with dry milk are enabling overseas sellers to bring in dry milk by stealth, in effect circumventing trade barriers.
American dairy farmers, especially those in the Northeast, are fearful of competition from the competitive dairy farmers of New Zealand, a prospective member of the TPP. The U.S. government keeps dairy prices high by a complex system of trade barriers and price supports that transfer money from consumers, dairy-using industries and taxpayers to dairy farmers and ensure that prices for dairy products never dip below a certain level. …