China has unilaterally lowered its tariffs on cheese imports from the US, from 12% to 8% in a broader package of tariff reductions on food and consumer goods which came into effect from 1 December 2017.
The US Dairy Export Council (USDEC) said the lower tariffs will immediately boost the competitiveness of US cheese exports and help US suppliers take a larger role in meeting China's booming cheese demand. “We are very pleased with China's decision because it will help US cheese exporters and manufacturers chip away the tariff disadvantage with other competitors,” said Tom Vilsack, USDEC President and CEO.
Cheese was included in the tariff reductions because of 3 years of bridge-building efforts led by USDEC. Those efforts focus on working with Chinese authorities to analyse the mutual benefits that would flow from China unilaterally lowering its tariffs on certain dairy products. USDEC has been focused on pursuing opportunities to address the competitive disadvantage faced by various US dairy exports into China and other markets, said Shawna Morris, Vice President of trade policy for USDEC.
Over the last decade, China's cheese imports soared more than 7-fold to nearly 100,000 metric tonnes. Already a Top 10 cheese buyer, it is set to emerge as the world’s largest cheese importer in the near future. US suppliers, on the other hand, had been losing market share in the past due to unfavourable tariff rates compared to its competitors. To illustrate, in 2016 US exported 11,743 tonnes of cheese worth US$38.2 million to China, and this was a sharp decline from 15,483 tonnes (US$53.3 million) in 2015. Market share for US cheese in China also dropped from 27% of total cheese imports in 2012 to 14% in 2016.
Morris added that Australia/NZ and the EU are the main competitors to US dairy products in China. The EU does not have a free trade agreement with China, as such it pays the same tariff rates as the US. Australia and New Zealand have agreements with China that provide duty-free access on certain quantity of their products and diminishing tariffs for various products, she said. The US remains at a disadvantage not only in China but in other countries when it comes to tariffs due to lack of US free trade agreements, said Jaime Castaneda, USDEC Senior Vice President of trade policy.