June 8, 1999

The National Milk Producers Federation lists five recommendations that should form the basis for U.S. negotiators at the upcoming round of international trade talks in Seattle this December. Topping the list is the elimination of all remaining dairy export subsidies within the next few years.

At a hearing in Chicago Monday, NMPF Vice President of International Trade Peter Vitaliano told negotiators that many trade barriers remain that U.S. dairy interests must battle. "These imbalances must be addressed in the new round of World Trade Organization negotiations if those negotiations are to have any positive impact for the U.S. dairy industry," he said.

The hearing was organized by the office of the U.S. trade representative and was one of several regional hearings being held this summer to receive input from the public on issues to be negotiated in the upcoming trade round.

NMPF presented five "key recommendations" for negotiation:

--Eliminate all remaining use of dairy export subsidies within no more than a few years. The current international trade agreement allows significant use of exports subsidies, said Vitaliano. The European Union accounts for 72% of the subsidy allowances, while the United States accounts for 3%, he said.

--Tariff inequities must be addressed before making any further multilateral tariff reductions or other market access liberalization. U.S. tariff levels generally are low compared to other nations, Vitaliano said. Over-quota tariffs on butter, milk powder and cheese range from 100-500% in Canada, the EU, Japan and Korea. Vitaliano said all dairy tariffs should be harmonized and reduced.

--Production-related domestic supports should be further reduced. "Overly generous domestic support programs have created continued dairy surpluses in the EU and Canada," Vitaliano said. That has prompted the "continued heavy use" of export subsidies.

--State trading enterprises should be further "disciplined" and their operations made more transparent. NMPF favors negotiating new commitments that would require increased transparency for both export and import STEs as well as disciplines on STE activities that distort trade.

--The current sanitary and phytosanitary agreement should not be renegotiated. The SPS agreement requires sound scientific principles for any trade dispute involving food safety. NMPF expects "a strong move" to reopen the agreement to address social and economic aspects of such issues as the EU's resistance to beef hormones and biotechnology.