WASHINGTON – Legislation to impose tariff-rate quotas on imports of milk protein concentrate (MPC) is gaining momentum in both the U.S. House and Senate.
Sens. Larry Craig, R-Idaho, and Mark Dayton, D-Minn., introduced the measure in the Senate March 6. An identical version was introduced the same day in the House by Reps. Don Sherwood, R-Pa., and David Obey, D-Wis.
Exploiting loophole. U.S. trade laws provide “minimal to no protection,” Craig said, from importation of MPCs and casein-based food and animal feed products. There are quotas on related dairy products such as nonfat dry milk and cheese.
“We have tariffs right now on similar products,” said Sherwood. “Foreign producers have been exploiting this oversight involving MPC and casein for too long.”
MPC imports have grown since the mid-1990s, rising from an average of 111 million pounds (nonfat milk equivalent) between 1995 and 1997, to an average of 266 million pounds from 2000 to 2002.
USDA figures show U.S. imports of MPC rose 18.1 percent in 2002, relative to a year ago.
Lost income. Dairy farmers feel the imports are contributing to pressure on milk prices, which are at 25-year lows.
The National Milk Producers Federation estimates that dairy farmers have lost an average of $150 million per year in income between 1994 and 2000 due to MPC imports.
The federation says the flow of milk protein imports is displacing domestically produced nonfat dry milk powder in the manufacture of cheese and other foods, depressing farm-level prices and creating a buildup of surplus stocks of nonfat dry milk powder, which taxpayers ultimately must pay for through USDA Commodity Credit Corporation purchases.
Uncommitted USDA inventories of nonfat dry milk, as of Feb. 14, 2003, were up 37 percent from a year ago, according to Penn State ag economist Ken Bailey.
Protectionism. Opponents say the bill smacks of protectionism and that it will limit access to affordable imports of food ingredients like MPC and casein.
“Time and again, proponents of trade protectionism have attempted to stymie the import of certain dairy proteins,” said a statement from the U.S. Coalition for Nutritional Ingredients, “and time and again policy makers have rejected those attempts.”
The International Dairy Foods Association joined the coalition in creating Consumers for World Trade to fight this issue on the Hill.
Penn State’s Bailey said 25 percent of MPC imports in 2002 came from the European Union, which subsidizes the production and export of MPC, a fact “particularly irritating” to U.S. trade policy analysts and dairy farmers.
“It appears that the U.S. market has become a dumping ground for excess protein production from the European Union,” Bailey wrote in a March 2003 analysis.
Trade questions. The opponents say limiting entry of MPC violates U.S. commitments under the World Trade Organization and will “trigger a cycle of retaliation” detrimental to consumers, farmers and U.S. food exporters.
Craig counters that the quotas would be consistent with U.S. tariffs on similar dairy products.
He also said the legislation contains language to make sure the quotas are consistent with GATT and WTO agreements.
‘Enormous’ price hikes. In a letter to congress, opponents said access to MPC and casein is critical because there is no domestic production of these dairy ingredients.
They warn of increased food prices if the measure goes through.
“If tariffs or tariff-rate quotas are imposed, these ingredients will cost about 50 percent more, causing enormous price hikes consumers will ultimately bear,” the letter said.
The coalition estimates the legislation would increase the cost of these ingredients by approximately $150 million annually.
MPC is made from ultrafiltered milk and is anywhere from 40 percent to 88 percent protein.
MPCs, casein and caseinates are used in such food products as baby food, sports food and drinks, coffee creamers, snack foods, cereals, sauces and gravies, and geriatric formulas.
Support on the Hill. The House bill, H.R. 1160, had 115 cosponsors as of May 9, including Ohio’s Steve LaTourette, Marcy Kaptur, Dennis Kucinich, Sherrod Brown and Tim Ryan. Pennsylvania had 12 of its representatives on board, including western Pennsylvania’s Phil English, Melissa Hart, Michael Doyle, John Murtha, Tim Murphy and John Peterson.
The bill was referred to the trade subcommittee of the House Ways and Means Committee.
The Senate version, S.560, was referred to the Committee on Finance. It has 24 co-sponsors, including Pennsylvania’s Arlen Specter.
Appeal will take closer look at MPC import blends
WASHINGTON – An attempt failed in April to get the U.S. Customs Service to reclassify MPC products so they would be subject to tariffs.
The Customs Service said the current tariff classifications for dairy products do not provide a clear definition of MPCs and how they are produced.
The agency determined that its current MPC classification is correct and need not be changed.
NMPF appeal. The National Milk Producers Federation, which represents dairy producers and milk marketing cooperatives, appealed the decision.
The federation said some importers of dairy protein blends are misclassifying the blends to avoid paying tariffs that would otherwise be assessed on skim milk powder imports.
The appeal triggers a year-long information gathering process. Blends in question will be monitored as they are imported.
The federation will take that information to the Court of International Trade and formally file a legal appeal of the customs decision.
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