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U.S., China Complete Dairy Certificate Negotiations

The U.S. will begin issuing the new certificate immediately for product destined for China

Published on: Jan 24, 2013

Dairy groups Wednesday praised successful negotiations with China on an import dairy certificate, a measure that ensures the flow of U.S. dairy into China continues uninterrupted.

U.S. and China government officials have been negotiating a new certificate for nearly three years, since China revised its requirements under the dairy certificate in the first part of 2010. Despite continued access to the Chinese market, the lack of an agreed-upon certificate impeded greater U.S. dairy exports, due to the uncertainty of whether the issue would ultimately be resolved.

"We commend the administration, as well as the Chinese government, for their conscientious and cooperative work on the dairy certificate over the past three years," said Jerry Kozak, NMPF president and CEO. "The positive announcement of a new certificate lifts the uncertainty that hung over the Chinese market, thereby encouraging greater U.S. dairy sales.

The U.S. will begin issuing the new certificate immediately for product destined for China
The U.S. will begin issuing the new certificate immediately for product destined for China

"It is important to acknowledge the responsible example set by China in this situation due to their careful handling of trade during certificate negotiations," continued Kozak. "Too often in the wake of new regulations, we see countries rush to shut their markets, even when no underlying food safety concern exists, simply over documentation matters. In its handling of this issue, China has set an admirable example for the world by permitting dairy trade with the U.S. to continue."

Matt McKnight, U.S. Dairy Export Council senior vice president for market access, regulatory and industry affairs, also praised China for keeping its market open.

"It is not always the case that a country is so willing to work with a major supplier to find mutually satisfactory ways to get the regulatory assurances it requires. They said, in essence, as long as good faith negotiations were moving forward, the market would stay open. If the United States became nonresponsive or if talks fell apart, China could have closed its doors," McKnight explained.

USDEC estimates the uncertainty of the certificate situation depressed U.S. dairy ingredient sales by 5-10% and cheese sales by as much as 50%. The impact was considerably greater in the case of cheese given the foodservice industry’s need for consistent supply and more limited interchangeability of cheeses.

Despite the impact of certificate negotiations, U.S. dairy sales to China in 2012 were an estimated $400 million. U.S. dairy exports to China have grown by more than 100% since 2010 and are expected to continue to grow to help meet the increasing demand for dairy products in that country.

"With the certificate question settled, we expect U.S. dairy export value to China could more than double by 2017," said Tom Suber, U.S. Dairy Export Council president. "Some or all of those sales could have been lost had it gone unresolved."

The U.S. will begin issuing the new certificate immediately for product destined for China. Certificates issued by the U.S. prior to Jan. 18, 2013 will be valid through March 20, 2013 but not accepted by China after that date.