By John Block and Charles Stenholm - 11/16/07 07:47 PM EST
It’s no secret that the reauthorization of the farm bill is a massive undertaking that involves many moving parts and requires bringing together consensus among multiple agricultural sectors. Often lost among the discussions on large commodity programs and global trade policy, however, are smaller, obscure provisions that benefit a select few at the expense of the masses.
Take, for example, some dairy producer groups that suggest Congress impose an assessment on imported dairy products to pay for domestic dairy promotion. While this assessment may sound harmless on the surface, a closer examination of the issue reveals that it’s both unnecessary and unfair, and would amount to an additional “food tax” that would eventually hurt consumers.
The Dairy Import Assessment (DIA) would be collected by U.S. Customs at the port of entry on all imported dairy products. The money collected would be given to a dairy check-off program that funds domestic milk promotion programs.
What makes the assessment extremely unreasonable is that because many of these imported products are merely ingredients for other consumer goods, they would not benefit from generic milk advertising. For example, did you know hot dogs, Doritos chips, baby formulas, nutritional products and even bagels contain imported dairy ingredients? There are hundreds of other products just like them that would be subject to the assessment under this proposed provision. The added costs of importing ingredients for these products could ultimately result in a “tax” being passed on to consumers who purchase these items every day.
Perhaps more troubling than its inherent unfairness is DIA’s possible trade implications and how they affect dairy exporters in the United States. The assessment would impose an estimated $8 million tax on our trading partners for these imported dairy products and could violate the national treatment clause of the 1994 General Agreement on Tariffs and Trade (GATT). By providing “less favorable treatment” to imports than to domestic products, we could put more than $2 billion in U.S. dairy exports at risk of trade retaliatory tactics. We strongly believe that putting $2 billion at risk for $8 million in additional revenue is simply not worth it in this case.
Finally, implementing the DIA would hurt some dairy farmers in parts of our country. Dairy farmers in Alaska, Hawaii and Puerto Rico currently do not pay into the check-off program and would be forced to do so under the proposed DIA provision. These farmers work extremely hard to provide dairy products for their local consumers, and making them pay an assessment they will likely get little benefit from will exacerbate their current financial strain.
We believe all these reasons make the Dairy Import Assessment an extremely risky proposal that is both unnecessary and unfair. While it is an issue mostly drowned out amid the noise over rewriting the massive farm bill, the inequity and trade risks of DIA, nonetheless, are important and need to be addressed as we move forward with the legislation. Let’s pass a farm bill that is fair and equitable for all involved and would not hurt America’s farmers and consumers while benefiting a select few.
Block is a former secretary of agriculture and Stenholm is a former Democratic House member from Texas. Both serve as senior policy advisers at Olsson, Frank and Weeda, which lobbies for opponents of the Dairy Import Assessment.