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Challenges to International Dairy Trade

The Uruguay Round agreements created a great deal of improvement in the promotion of free markets. Despite this, extensive subsidies, high tariffs and numerous non-tariff barriers still exist in most countries. These inhibit, and in some cases prohibit, competition from more efficient dairy product competitors. Comparison of tariff barriers in the dairy sector is made difficult by the fact that tariff rates are often not ad valorem, or proportional rates based on the product value. Conversely, they are compound rates whose relative value varies depending on market prices.

Tariff-rate quotas (TRQs) are prominent in many major dairy producing-countries that had import quotas enforced prior to the implementation of the Uruguay Round agreements. In the majority of these countries, the over-quota tariff rate is a prohibitive rate, discouraging trade. Besides large tariff rates, import licensing rules and procedures associated with TRQ often pose additional barriers to effective market access.

In addition to tariff barriers, an assortment of other regulatory obstacles can impede U.S. dairy exports in many markets. These obstacles include: unreasonable packaging and labeling requirements, pre- and post-shipment testing and inspections, mandatory recipe and manufacturing information, shipments held at port of entry for lab testing or other sanitary examinations, unreasonably short shelf-life provisions, pre-import registration and licensing requirements, and limitations on internationally approved colors and food additives.

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