[Congressional Record Volume 149, Number 36 (Thursday, March 6, 2003)]
[Senate]
[Pages S3318-S3319]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CRAIG (for himself, Mr. Dayton, Mr. Coleman, Mr. Leahy, 
        Mr. Bond, Mr. Bingaman, Ms. Snowe, Mrs. Lincoln, Mr. Shelby, 
        Mr. Jeffords, Mr. Domenici, Mr. Levin, Ms. Collins, Mr. 
        Johnson, Mr. Specter, Mr. Feingold, and Mr. Kohl):
  S. 560. A bill to impose tariff-rate quotas on certain casein and 
milk protein concentrates; to the Committee on Finance.
  Mr. FEINGOLD. Mr. President, I am pleased today to show my support 
for the Milk Import Tariff Equity Act of 2003 by being an original 
cosponsor of Senator Craig's bill. This legislation will prevent 
foreign dairy products from continuing to circumvent U.S. trade laws.
  Currently, milk protein concentrate, MPC, is not subject to the same 
quotas required of other dairy products. Foreign dairy producers have 
begun exploiting this loophole by blending previously processed dairy 
proteins with nonfat dry milk to boost its protein content so that it 
qualifies as milk protein concentrate. This allows the milk protein 
concentrate to circumvent any laws that would subject the imports to 
tariff rate quotas.
  The result has been a flood of foreign dairy blends being imported in 
the U.S. market, displacing sales of domestic dairy products and 
lowering prices for American dairy farmers.
  As milk prices are at historic lows, down about 38 percent from 
prices last year, this flood of foreign dairy products has put a strain 
on many of the dairy farmers in my State of Wisconsin.
  Since many of the blended products imported into this country are 
heavily subsidized, American farmers are forced to compete on an unfair 
playing field. This loophole in our tariff schedule allows certain 
heavily subsidized foreign dairy products nearly unfettered access to 
our dairy markets, hurting the American dairy farmers.
  As I travel across Wisconsin, I have heard from any dairy farmers who 
are struggling to stay in business. Many of these farmers are concerned 
about the flood of unfair imports that are hurting our American dairy 
markets.
  In March of 2001, the General Accounting Office, GAO, released a 
report that highlighted the increase of milk protein concentrates 
coming into this country under outdated trade laws. The report pointed 
to a loophole in our trade laws that has resulted in increased imports 
of blended dairy proteins. The importing of blended dairy proteins is 
being done solely for the purpose of avoiding the U.S. tariff rate 
quota for nonfat dry milk.
  The GAO study determined that MPC imports surged by more than 600 
percent in the six years before the report was released. MPC imports 
lower prices for U.S. dairy farmers by displacing sales of domestic 
dairy products.
  Since I have received the results from the General Accounting Office 
study that reported this loophole in U.S. trade laws, I have 
participated in a bipartisan effort to amend this loophole, so that we 
may protect our dairy farmers from unfair trade practices and help them 
in the struggle to farm on such an unfair playing field.
  This bill would close this loophole by regulating milk protein 
concentrate imports in the same manner all other dairy import products 
are regulated. It would correct a loophole that exists in U.S. trade 
law that is contributing to such low dairy prices experienced in my 
state of Wisconsin and across the Nation.
  This loophole depresses the price of milk for farmers, costs U.S. 
taxpayers money, and gives foreign dairy producers an unfair advantage 
over our own dairy farmers. It is time for this Congress to stand 
behind our farmers and that is why I support the Milk Import Tariff 
Equity Act of 2003.
  Mr. LEAHY. Mr. President, I am pleased to join my colleagues Senator 
Mark Dayton and Senator Larry Craig in introducing the bipartisan Milk 
Import Tariff Equity Act. Our bill will prevent importers of dairy 
products from circumventing U.S. trade laws.
  Although I opposed it at the time, during the Uruguay Round 
multilateral trade negotiations, the United States agreed to allow a 
substantial increase in dairy product imports into this country. Tariff 
rate quotas were established to allow imports of most dairy products to 
rise from an average of 2 percent of domestic consumption to as much as 
five percent. At least initially, these controls appeared to be 
effective. But foreign competitors have found ways to circumvent these 
quotas by adjusting the protein content of nonfat dry milk so that it 
is classified

[[Page S3319]]

by the U.S. Customs Service as milk protein concentrate, MPC. While 
nonfat dry milk imports are strictly regulated, there are no quotas on 
MPCs and duties are low.
  A recent GAO study requested by Congress determined that MPC imports 
surged by more than 600 percent over a six year period. MPC imports 
lower prices for U.S. dairy farmers by displacing sales of nonfat dry 
milk. According to the GAO study, some exporters are blending 
previously processed dairy proteins, such as casein, whey and nonfat 
dry milk into MPC solely for the purpose of avoiding the U.S. tariff 
rate quota for nonfat dry milk. This practice, specifically cited in 
the GAO report, circumvents statutory U.S. trade provisions designed to 
regulate imports of nonfat dry milk powder.
  It is time to close this loophole. Under our bill, MPCs would be 
regulated in the same manner as all other dairy products: by imposing 
tariff-rate quotas on MPC imports. This legislation also closes a 
similar loophole that exists for casein used in the production of food 
or feed, while continuing to allow unrestricted access for imports of 
casein used in the manufacture of glues and for other industrial 
purposes.
  Most Americans probably don't realize it, because retail fluid milk 
prices have hardly changed, but dairy farmers in Vermont and across 
this Nation are really struggling. Farm-gate milk prices have fallen 
more than 30 percent over the past 18 months and are now at the lowest 
levels in 25 years. Even the most efficient producers are unable to 
make a profit at these prices. Prices are low in part due to these 
imports. Others will argue that MPC imports represent just a small 
fraction of U.S. milk production. But when you are dealing with a 
perishable commodity like milk, even a slight increase in supply can 
have a dramatic effect on prices.
  Closing the MPC loophole is one of the most important steps we can 
take to help our nation's dairy farmers. I commend Senators Dayton and 
Craig for their leadership on this issue, and I urge my colleagues to 
join me in cosponsoring this important legislation.
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