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Press ReleaseFOR IMMEDIATE RELEASE: June 30, 19990
Dutch Report Challenges WTO Legality of Dairy Compacts And Other U.S. Ag ProgramsWashington, D.C. — The Dairy Trade Coalition (DTC) obtained a copy of
a report entitled, "The United States' Dairy Sector and the WTO" published
by The Dutch Ministry of Agriculture, Nature Management and Fisheries and
the Dutch Dairy Association. The report, published in the Hague,
is dated June
Mario Castillo, Executive Director of the Dairy Trade Coalition (DTC) said, "The report outlines how programs currently utilized by the American dairy industry will come under pressure from the European Union (EU) at the WTO trade talks in Seattle beginning in November." The Dutch study suggests that the Federal Milk Market Order (FMMO) system
and the Northeast Dairy Compact are violations of WTO regulations.
On the FMMO, the report states:
By supplementing the basic milk price with Class I differentials, the federal authorities keep the price of fluid milk artificially high. The price differentials effectively constitute an indirect subsidy of manufacturing grade milk. This enables the US to market processed milk products, including cheese, at a lower price on both the domestic market and the export market. Some US economists estimate the total support to dairy farmers at about $500 million per year. The Dutch report further states, "The rise of the dairy compacts in the United States shows that the Congress approves of fluid milk cartels which seriously unbalance the domestic market for manufactured dairy products. As far as these manufactured products are subsequently brought to the world market, it is justified to refer to the practice as a hidden export subsidy." The report also states, "in our opinion, the legality of such a cartel is contestable in the WTO. In short, we feel that the European Union should examine American fluid milk policy carefully to see whether it complies with WTO regulations." The study comments that, "if more such dairy compacts arise in other parts of the U.S., this is certainly another point on which to attack [emphasis added] the United States in the WTO negotiations." Castillo commented, "The Dutch report appears to be well researched
and should be the clarion call to the American dairy farmer. In future
trade talks, many nations will challenge the WTO legality of many of our
programs. I'm not surprised that the Europeans will be questioning many
of our programs. A Canadian dairy organization has already issued
their own report targeting 99 U.S. programs which they contend raise the
dairy farmer's milk price by $5.63 per hundredweight. The Canadians have
targeted our FMMO, dairy
The Dutch report maintains that, "The government's [U.S. government] support of dairy exports does not contribute to a sustainable growth in US dairy Exports." And that, "Few [in the U.S.] realize the potential threat of increased dairy imports on the domestic milk price." Castillo concluded, "A report prepared for Dairy Farmers of Canada (DFC) states that in ‘California's Westland Water District . . . farmers pay about $17 for water needed to irrigate an acre of land when the real cost is $42. In the Quincy Water District of Oregon, irrigating a 960-acre farm with a foot of subsidized water costs farmers about $1,900, while the full cost is about $70,000.' Is the U.S. government willing to eliminate all of our domestic programs? If so, in return for what?" |
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