Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



New Zealand vs USA On Milk Subsidies

On June 8, 2009, the Wall Street Journal published an interesting opinion piece by Don Nicolson entitled "Milking Trade Subsidies".  The article provides some very useful information that is worth repeating:

  • In May 2009, the U.S. Secretary of Agriculture, Tom Vilsack, implemented the Dairy Export Incentive Program, or DEIP. Under the program, re-authorized by Congress in last year's Farm Bill, the U.S.D.A. pays subsidies to American dairy farmers (euphemistically described as "bonuses") to cover the difference between farmers' cost of production and prevailing international prices.
    • Subsidies negatively impact consumers everywhere. As a result of the DEIP, American families pay higher taxes to support subsidized dairy farmers thereby, wiping out any savings they might enjoy from lower dairy prices.
    • Subsidies effectively shield farmers from true competition. Higher prices always result, and this price increase is passed straight onto consumers.
    • There's nothing inherently "fair" about any form of subsidy.
    • Between 2006 and 2009, neither America nor Europe imposed dairy export subsidies.
    New Zealand is the world's second-largest dairy exporter, after the EU and ahead of the U.S. New Zealand has reached that market position without any farm subsidies whatsoever.

Are the DEIP dairy subsidies protectionist in nature?  Sure they are.

Are the DEIP dairy subsidies contary to all the talk about avoiding protectionist tendencies?  Yes.

So, why are the Americans going down this road?  Is this another example of Congress not thinking things through?  Do they realize what they are doing?  Or, have they pursued this because they think it is the right policy decision?

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