The World Trade Organization in September released its biennial review of U.S. trade policies with praise for the country's openness and restraint during the recent recession. While mostly positive in tone, the report highlighted the global trade impact of U.S. domestic agricultural support policies and specifically mentioned dairy as a commodity with relatively higher support compared to other commodities.
A formal review of all WTO member country trade policies was established in 1988 and became permanent in 1995. The WTO General Council serves as the trade policy review board. The top four countries with the most international trade activity - currently China, the European Union, Japan and the United States - are reviewed every two years. The second tier of 16 countries is reviewed every four years, and all others undergo a review every six years.
The report commended the United States for not raising additional trade barriers during the global economic downturn. "The restraint shown by the United States helped forestall a worldwide slide into protectionism," the WTO report stated. "Border measures such as tariffs and quantitative restrictions have remained broadly unchanged."
Report Singles out Dairy
However, a major theme of the report focused on the need for the United States to balance export promotion with the in-kind reduction of import barriers and to take a renewed leadership role in advancing a multilateral free trade agenda. The report singled out dairy, tobacco and sugar as having the highest tariffs within the agriculture sector, with agriculture having more tariffs overall than any other in the U.S. economy. The tariff average for dairy products was about 23 percent, second only to tobacco.
"Export promotion should be complemented by continued reduction in remaining restrictions on market access and other distorting measures," the report said.
The report also named U.S. support to dairy producers as the second highest total, with an estimate of 23 percent of gross farm receipts, driven by the continued existence of the Dairy Product Price Support Program.
"Market price supports are among the less efficient and trade-distorting forms of support to agricultural products," the report noted. These policies are considered less efficient than alternatives, it said, because the benefits are lost to higher import and resource costs.
"IDFA has consistently advocated for phasing out the Dairy Product Price Support Program and replacing it with better, more efficient safety-net policies, consistent with this WTO evaluation of its trade-distorting impact," said Ruth Saunders, IDFA vice president of policy and legislative affairs.
View an executive summary and the full report here.
Members with questions may contact Saunders at email@example.com.