Family Dairy Farmers need the Milk Import Tariff Equity Act of 2003 (MITEA)!

04/01/2003

• The Milk Import Tariff Equity Act of 2003 (H.R. 1160 and S. 560) will provide a fair, equitable, affordable and WTO-legal solution to the ongoing problem that dairy protein imports are having on the U.S. farm sector. It will simply apply the same tariff-rate quotas currently assessed on related dairy products (skim milk powder) to Milk Protein Concentrate (MPC) and Casein used in the food and animal feed industries.
• The National Grange is a member organization of Dairy Producers for Fair Trade, a coalition of 30 state, regional and national farms groups that have united in their efforts to pass MITEA. We ask for your support for this crucial legislation, which will directly affect the livelihood of America's 75,000 dairy farm families. (Refer to our recent action alert on MITEA)
• Please Contact your Senators and Representative to Urge them to Cosponsor MITEA (H.R. 1160 and S. 560).

What is Milk Protein Concentrate & casein?
Milk Protein Concentrate is the product of a technology known as ultrafiltration. During the ultrafiltration process, skim milk is passed through membranes designed to separate out most of the water, lactose and other solids, leaving behind a product known as "retentate" which consists mostly of protein. In most cases, the retentate is subsequently dried for further distribution and/or storage.

Casein is the primary form of dairy protein in milk. It is produced either by filtration through specialized membranes, or through acid precipitation or enzyme (rennet) coagulation from skim milk. It is usually converted to its more soluble form, caseinate, and subsequently dried.

The economic impact of MPC and casein imports on U.S. dairy farmers
The surge in imports of MPC has created a negative ripple effect economically for U.S. dairy producers, who have suffered because of reduced milk sales, lower prices, and a weakening of the price support program, the principal dairy safety net.

Imports of MPC have displaced domestically-produced dairy proteins such as skim milk powder, which in many cases can be substituted for MPC, particularly in cheese production and other dairy goods. There has been a corresponding rise in the domestic build-up of skim milk powder supplies as imports have risen since the mid-1990s.

The reason why the U.S. doesn't manufacture MPC and casein
It is difficult for the U.S dairy industry to compete against imports that are heavily subsidized. For example, most European Union dairy exports benefit from direct subsidies as well as from regulations that allow discriminatory pricing (inward processing). In addition, New Zealand's dairy industry has a monopoly (single-desk seller) export body capable of minimizing price competition among its exporters. Establishing a domestic MPC and casein industry will prove exceedingly difficult as long as enormous quantities of subsidized and/or specially priced imported milk proteins can enter the U.S. without limit.

What would this legislation do?
H.R. 1160 and its identical companion bill, S. 560 would simply apply the same tariff-rate quotas currently assessed on related dairy products (skim milk powder) to MPC and casein used in the food and animal feed industries (casein used for industrial purposes would not be subject to the new tariffs). Thus, the current duty of $0.0037 per kilogram ($0.0017 per lb.) would rise to $1.56 per kilogram ($0.71 per lb.) for MPC with up to 90% protein, and to $2.16 per kilogram ($0.98 per lb.) for MPC with protein levels greater than 90%. Casein and casein products would also be assessed duty at a rate of $2.16 per kilogram.

Does this legislation conform to World Trade Organization rules?
The authority that would be granted to the President under these bills to renegotiate tariff concessions and provide trade compensation as necessary would ensure that the U.S. could fix the loophole in a WTO-consistent manner. Indeed, nothing prevents a WTO member from renegotiating its tariff concessions under Article XXVIII of the GATT. H.R. 1160 and S. 560 would provide for a legal and WTO-consistent renegotiation of the relevant tariff concessions. At least twelve renegotiations of tariff concessions under Article XXVIII have been launched under the GATT and WTO, most of them concerning agricultural products. No WTO member country has ever retaliated against another WTO member that raised a tariff under the GATT agreement's Article XXVIII.

The National Grange's policy on dairy imports is summarized in our policy book:

The National Grange opposes the importation of caseinates and urges the adoption of tariff rate quotes on Milk Protein Consentrates entering the country.

Action Plan --- Please contact your Senators and House Representative to urge them to cosponsor H.R. 1160 and S. 560. If you want to find your Senators and House Representative contact information, please click the following.

Senators
House Representative

If you have any questions or comments please contact Legislative Research Analyst Chil-Sook Hwang by fax: 202-347-1091 or by phone: 1-888-4GRANGE, ext 109. Thank you for your grassroots participation in the National Grange Legislative program.

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