Brazilians Move Closer to U.S. Retaliation in WTO Cotton Case

On February 10th the Brazilian government announced that on March 1, 2010 it will make public a final retaliation list of U.S. imports that would be subject to additional duties. The final goods list will be worth $269 million worth of trade.

This move by the Brazilians is the newest turn of events in a longstanding U.S.-Brazil cotton controversy that might result in trade retaliation against imports from the U.S., including several dairy commodities. In November, Brazilians drew up a list of 222 U.S. imports that may be potential targets for trade retaliation, including milk powder with less than 1.5 percent fat and whey. In 2008, the U.S exported about $10 million of these commodities to Brazil.

While U.S. Trade Representative Ron Kirk has indicated interest in negotiating a settlement that would avoid retaliation, there has been little action.

"What was once just a cause for concern within the cotton industry now carries potential danger for a wide range of American industries," said Clay Hough, IDFA senior group vice president and general counsel. "We urge the U.S. Trade Representative to address the WTO decision without causing harm to U.S. dairy manufacturers."

Mexican Trucking Dispute Remains Unresolved, Retaliations Linger for U.S. Goods

Mexican Secretary for Trade Beatriz Leycegui indicated this week that current retaliatory tariffs on $2.4 billion worth of U.S. exports will continue. Last March, The $410 billion omnibus appropriations bill signed by President Obama eliminated the funding for the U.S. Department of Transportation's Cross Border Trucking Pilot Program with Mexico, which prompted swift reaction on a number of U.S. goods going into Mexico.

The trucking program, which allowed Mexican trucks to deliver goods to U.S. destinations, was designed to fulfill U.S. obligations to Mexico under the 1994 North American Free Trade Agreement (NAFTA). However, Mexico's announcement last week indicated that a simple reinstatement of funding to the program would not be sufficient, and that U.S. officials needed to work harder towards a more sustainable and comprehensive solution

The trucking program was important for the dairy processing industry, because Mexico is one of the largest trading partners for the United States. Because trucks move more than half of this trade flow across the shared border, the program helped to lower costs and ease congestion throughout the supply chain.

"Although U.S. dairy exports have yet to be hit significantly by retaliation, our members export a great deal to Mexico and we want to make sure they can continue their business without excessive tariffs and duties" said Katie Sparrow, IDFA manager of international affairs.

Domestic dairy exports to Mexico totaled over $936 million in 2008, almost a 10 percent increase from 2007. U.S. dairy imports from Mexico reached nearly $140 million in 2008, a 32 percent increase from 2007 trade values.

USDA Dairy Grading Branch Seeks IDFA Member Input

IDFA recently received a request from USDA regarding new electronic forms to request EU export certificates. In accordance with the Paperwork Reduction Act, they need feedback from individual companies on how long it takes to complete the proposed forms, DA-228 and DA-229, which can be located here and here.