DAIRY

The Uruguay Round agriculture agreement will establish disciplines in the areas of market access, export subsidies, internal support, and sanitary and phytosanitary measures. In addition, countries have made a number of commitments that will benefit U.S. agricultural exports. Highlights for the U.S. dairy industry, whose 1992 exports totaled $762 million, include the following:

Key Developments for U.S. Exports:

• EU Cuts Export Subsidies: The European Union will reduce the quantity and budgetary outlay for export subsidies from the current level. In the year 2000:
  • The maximum allowable quantity of subsidized butter will be 366,000 tons, a 97,000-ton reduction from the 1986-90 period.
  • The maximum allowable quantity of subsidized skim milk powder will be 243,000 tons, a 65,000-ton reduction from the 1986-90 period.
  • The maximum allowable quantity of subsidized cheese will be 305,000 tons, a 122,000-ton reduction from the 1991-92 average.
  • The maximum allowable quantity of subsidized "other dairy products" will be 939,000 tons, a 267,000-ton reduction from the 1991-92 average.
• EU Increases Market Access Opportunities for Cheese: As part of its miminum access commitments, the EU will establish new tariff-rate quotas for 104,000 tons of cheese by the end of the implementation period. As a result of US-EU bilateral negotiations the EU will permit imports of 5,000 tons of pizza cheese and 15,000 tons of cheddar cheese at tariff rates similar to those applied by the United States. The EC will establish tariff- rate quotas for cheeses for processing (20,000 tons), ementaler cheese (25,000 tons) gruyere (7,000 tons) and other cheeses (32,000 tons) with higher in-quota rates.
• EU Increases Market Access Opportunities for Nonfat Dry Milk: As part of its minimum access commitments, the EU will establish a new tariff-rate quota for 69,000 tons of nonfat dry milk by the end of the implementation period.
• Japan Increases Market Access Opportunities: Japan will establish a 3,000-ton quota for whey powder which will grow to 4,500 tons at the end of six years, and a 2,200-ton quota for ice cream mix powder which will grow to 3,700 tons at the end of six years. Japan will reduce the tariff on frozen pizza cheese by 36%, the tariffs on ice cream, grated cheese, and frozen yogurt by 25%, and the in-quota tariff on ice cream mix powder by 25%.
• Korea Increases Market Access Opportunities: Korea will establish a 23,000-ton quota for whey in 1995 that will increase by 10% annually over ten years, with an in-quota tariff of 20% and an over-quota tariff of 99% that will be reduced to 49.5% over 10 years. Korea will also fully liberalize imports of all types of cheese, infant formula and other dairy food preparations (including ice cream mix powder) in 1995, at a tariff of 40% which will be reduced to 36% over ten years.
• Malaysia Reduces Dairy Tariffs: Malaysia will reduce its tariffs on yogurt, buttermilk, kephir and fermented cream, flavored other than with chocolate, from 35% to 10% and will reduce the tariffs on those containing cocoa from the higher of 40% or Malaysian $5/kg to 10%. It will reduce its tariffs on all cheese types other than fresh from 20% to 10%.
• Thailand Reduces Cheese Tariffs: Thailand will cut its tariffs on cheese in half, to 30% or 10 baht/kg, during the ten-year implementation period. In addition, Thailand will limit the application of alternative specific tariffs to the ad valorem levels bound in their schedule.
• Tunisia Guarantees Access for Nonfat Dry Milk: Tunisia will establish a 20,000-ton tariff-rate quota for nonfat dried milk with a 17% in-quota duty.
• Sweden Opens Access for Pizza Cheese: Sweden will open a 300- ton tariff-rate quota for pizza cheese with a 10% in-quota duty.
• EFTA Countries Open Access for Butter: Norway, Finland, and Austria will establish tariff-rate quotas for 4,337 tons of butter by the year 2000, increasing access by 4,285 tons from the average of 1986-88 imports.
• Costa Rica Increases Access For Dairy Products: Costa Rica will establish tariff-rate quotas for a variety of milk products, butter oil, and cheese totalling 671 tons.

U.S. Commitments:

• Market Access: The United States is replacing Section 22 import quotas for dairy products with tariff equivalents, which will be reduced by the minimum required 15% in equal annual installments over 6 years beginning in 1995. The tariffs for major traded products will be:
  • non-fat dry milk Base tariff of 101.8 cents/kg reduced to 86.5 cents/kg
  • butter Base tariff of 181.3 cents/kg reduced to 154.1 cents/kg
  • cheese Base tariff of 144.3 cents/kg reduced to 122.7 cents/kg

  The import quotas for cheese which total 110,999 tons will be converted to tariff-rate quotas and increased by 30,992 tons to 141,991 tons by the year 2000. Of this quantity, 5,550 tons is reserved for Mexico in accordance with the NAFTA agreement. The new access will be allocated by country. The United States is establishing tariff-rate quotas for other dairy products that will account for 13,700 tons of milk fat and 16,100 tons of non-fat solids in the first year of the agreement, growing to 22,785 tons and 26,825 tons respectively by the year 2000. The increase will be allocated to existing Section 22 categories in the manner indicated below. Small portions of these quotas are reserved for Mexico in accordance with the NAFTA agreement.

                                 Quota Quantity      Quota Quantity
                                     in 1995             in 2000
       Fresh/frozen cream    5,801,600.0 liters  6,768,500.0 liters
       Evaporated/condensed milk 3,000.0 tons        7,000.0 tons
       Dried lowfat milk         1,500.0 tons        5,500.0 tons
       Dried whole milk            550.0 tons        3,500.0 tons
       Dried cream                 100.0 tons          100.0 tons
       Dried whey/buttermilk       300.0 tons          300.0 tons
       Butter                    4,000.0 tons        7,000.0 tons
       Butter oil/substitute     3,500.0 tons        6,100.0 tons
       Dairy mixtures*           2,100.0 tons*       4,300.0 tons*
       Chocolate crumb          16,000.0 tons       26,700.0 tons
       Lowfat chocolate crumb    2,122.8 tons        2,122.8 tons
       Milk replacer feed        7,400.0 tons        7,400.0 tons
       Ice cream             3,576,112.0 liters  5,960,186.0 liters
  

  * 100 tons is set aside for infant formula containing oligosaccharides

• Export Subsidies: The United States will establish quantity and budgetary outlay ceilings for subsidized exports of dairy products. The final year commitments are the required 21% and 36% below the 1986-90 base for the quantitative and budgetary commitments, respectively. Some of the reductions will begin from 1991- 92 average levels. The annual allowable quantities and expenditures will be the following:

  Butter/Butter Oil	1995	1996	1997	1998	1999	2000	Quantity (tons)	42,989	38,611	34,232	29,854	25,475	21,097	Budget($1,000)	44,793	41,934	39,075	36,215	33,356	30,497

  Non-fat Dry Milk	1995	1996	1997	1998	1999	2000	Quantity (tons)	108,227	100,222	92,217	84,212	76,207	68,201	Budget ($1,000)	121,119	113,388	105,657	97,926	90,195	82,464

  Cheese	1995	1996	1997	1998	1999	2000	Quantity (tons)	3,829	3,669	3,510	3,350	3,190	3,030	Budget($1,000)	5,340	4,999	4,658	4,317	3,976	3,636

  Other Dairy	1995	1996	1997	1998	1999	2000	Quantity (tons)	12,456	9,971	7,487	5,003	2,518	34	Budget ($1,000)	14,374	11,503	8,633	5,762	2,892	21

  (Note: This fact sheet is a summary of Uruguay Round highlights; it does not reflect all results.)

  June 1994

Last modified: Friday, November 18, 2005