IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
← back to the state act
Inception date: 01 Apr 2011 | Removal date: open ended
Still in force

Internal taxation of imports

On March 18, 2011 the U.S. Department of Agriculture published a final rule (based on a proposed rule in the May 19, 2009 Federal Register) imposing a fee on imports of dairy products. The revenues raised by this fee, set at a rate of 7.5 cents per hundredweight or its equivalent, arevused to promote the consumption of dairy products in the United States. The rule came into effect on April 1, 2011.
The proponents of this fee sought its imposition for nearly a decade. Domestic milk producers have paid fees into this promotional program since enactment of the Dairy Production Stabilization Act of 1983, and have sought to have the same fees imposed on imports. In principle, they succeeded in having these fees extended to imports under the Farm Security and Rural Investment Act of 2002 (commonly known as the 2002 Farm Bill), but concerns over the legality of the fee prevented the USDA from exercising its authority to implement the fee. Under the 2002 Farm Bill the domestic fee was not applied to farmers in all 50 states. Importers of dairy products argued that because not all U.S. production was subject to the fee, extending it to imports would mean violating the national treatment requirement of Article III of the General Agreements on Tariffs and Trade.
The Food, Conservation, and Energy Act of 2008 (the 2008 Farm Bill) made two changes intended to ease the imposition of these import fees. First, it addressed the concerns over national treatment by requiring that the fee be applied in every state as well as the Commonwealth of Puerto Rico and (rather improbably) the District of Columbia. Second, it provided for a lower rate on imports than on domestic production. Section 1507(d) of the law provides that 'The rate of assessment for milk produced in the United States prescribed by the order shall be 15 cents per hundredweight of milk for commercial use or the equivalent thereof,' but that 'The rate of assessment for imported dairy products prescribed by the order shall be 7.5 cents per hundredweight of milk for commercial use or the equivalent thereof.'
The National Milk Producers Federation (NMPF) is the principal advocate of the program. In an April 3, 2009 letter to the Director of the Office of Management and Budget, the NMPF chairman stated that the lower rate on imports was 'obviously not ideal since it does not ensure completely equal treatment of imported vs. domestically produced dairy products.' He nevertheless urged that the administration 'swiftly propose and finalize a rule on the dairy import assessment,' despite the fact 'that there are a small handful of importers, led by foreign companies such as New Zealand's Fonterra and the International Dairy Foods Association, who are very vocally opposed to this measure since it would cost them a few dollars off their bottom line.' In response to the aforementioned call for comments, the NMPF filed its own comment on June 18, 2009.
 

AFFECTED COUNTRIES

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TABLE
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AFFECTED SECTORS AND PRODUCTS

221 Processed liquid milk, cream & whey
0401 Milk and cream, not concentrated nor containing added sugar or other sweetening matter.
040120 Of a fat content, by weight, exceeding 1 % but not exceeding 6 %
040150 Of a fat content, by weight, exceeding 10 %
0404 Whey, whether or not concentrated or containing added sugar or other sweetening matter; products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included.
040410 Whey and modified whey, whether or not concentrated or containing added sugar or other sweetening matter
222 Other dairy products
0402 Milk and cream, concentrated or containing added sugar or other sweetening matter.
040221 Not containing added sugar or other sweetening matter
040229 Other
040291 Not containing added sugar or other sweetening matter
040299 Other
0403 Buttermilk, curdled milk and cream, yogurt, kephir and other fermented or acidified milk and cream, whether or not concentrated or containing added sugar or other sweetening matter or flavoured or containing added fruit, nuts or cocoa.
040310 Yogurt
040390 Other
0404 Whey, whether or not concentrated or containing added sugar or other sweetening matter; products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included.
040490 Other
0405 Butter and other fats and oils derived from milk; dairy spreads.
040510 Butter
040520 Dairy spreads
040590 Other
0406 Cheese and curd.
040610 Fresh (unripened or uncured) cheese, including whey cheese, and curd
040630 Processed cheese, not grated or powdered
040640 Blueveined cheese and other cheese containing veins produced by Penicillium roqueforti
040690 Other cheese

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