J. Mark Huffman

Exports to Chile Rise, Butter Imports Increase

"This proves what we've known all along, that the U.S. dairy industry benefits from free trade," said Clay Hough, senior vice president and general counsel of the International Dairy Foods Association.

From January to June 2004, U.S. exporters sent Chile $1.4 million worth of American cheese, an increase of 118% from last year, as well as $115,000 worth of ice cream, an increase of 202%. U.S. imports of Chilean dairy products are also greater than last year's amounts, but to a lesser degree.

The increase in U.S. dairy exports appears to be coming at the expense of Argentina and Uruguay. Prior to the launch of the trade agreement, those countries together supplied one-half to two-thirds of Chile's dairy imports. U.S. dairy product exports had been hampered by several restrictions due to differences in inspection regulations and grading standards, as well as a 6% tariff rate.

U.S. milk producers are crying foul in the wake of rising imports of foreign butter products. In a letter to Agriculture Secretary Ann Veneman, the National Milk Producers Federation charged that butter imports have jumped 89% over last years levels, and are fast approaching the 13,754 metric ton safeguard level. Once that trigger level is reached, the U.S. is entitled to impose higher than normal tariffs on butter products. The trade group representing U.S. dairy farmers called on USDA to immediately impose the higher tariffs as soon as imports reach that threshold.

"We hope the USDA will be sensitive to America's dairy farmers, the will of Congress, as well as to the commitments made by U.S. trade negotiators, as it considers the best response to the impact of these products. All we are asking is that the U.S. government play by the same rules that others have agreed to, and use in their own countries," said Jerry Kozak, President and CEO of NMPF.