Presentation on theme: "Dairy Disputes in North America: A Case Study Tom Cox University of Wisconsin-Madison Danny Le Roy The University of Lethbridge Ellen Goddard University."— Presentation transcript:
Dairy Disputes in North America: A Case Study Tom Cox University of Wisconsin-Madison Danny Le Roy The University of Lethbridge Ellen Goddard University of Melbourne
2 Introduction n Analyses of three disputes n Comparison of US and Canadian dairy policy n Summary
3 Comparison of US and Canadian Dairy Policies: Similarities n Dairy versus Total Agricultural Producer Support: OECD PSE Measures. n Border Protection: –TRQ’s: Quotas, Within and Over Quota Tariffs. n Export Subsidies. n Intervention Prices/Price Supports. n Classified Pricing. –Provincial versus Federal/California MMOs. n Regionalism !!!
4 Comparison of US and Canadian Dairy Policies: Key Differences n Milk Production Quotas. –Basis for Two-Tiered Export Pricing via Class Vd/Ve. –Clever Way to “Buy Off” Pressure to Increase/Eliminate Quotas ??? But, via WTO Ruling, Not Clever Enough !!! –Difference with US Classified Pricing ??? US Pricing Not Targeted to Export Market !!! –Dynamic Growth versus Stagnant Quota Industry Implications ??? n Level of Protection and Domestic Pricing.
5 OECD Producer Subsidy Equivalents (%)
7 GATT Increased Import (Quota) Access
8 GATT Import Tariff Reductions
9 GATT Reduced Subsidy Commitments
10 US/Canada Intervention Prices
11 Dairy Disputes n US typically initiates action against Canada –Ice cream and yoghurt –Conversion of import quotas to tariffs –Canadian classified pricing
12 Ice Cream and Yoghurt n Background CUSTA Consumption trends n Action Import Control List GATT panel n Outcome Import controls converted to tariffs
13 Ice Cream and Yogurt n Evidence of the costs –Imports of Ice Cream into Canada
14 Ice Cream and Yoghurt
15 Ice Cream and Yogurt n Evidence of Costs –Imports of yoghurt into Canada
16 Ice Cream and Yoghurt
17 Tariffication n Background CUSTA, NAFTA, GATT and WTO Article XI.2.c n Action Import quotas converted to tariffs NAFTA challenge n Outcome Tariffication conformed fully with NAFTA
18 Tariffication n Evidence of costs 1$ billion (United States Dairy Export Council) Meilke, Sarker and Le Roy (1998) –Welfare gains (C$331 m) »gains to consumers and taxpayers larger than losses to producers
19 Canadian Classified Pricing n Background Levies to fund Canadian Exports Special Milk Classes Scheme n Action US, NZ claimed new CDN pricing system subsidizes exports (5d & 5e) WTO panel n Outcome Panel ruled in favour of the complainants 5d/5e in violation of WTO Agreement on Agriculture Articles 9.1(a) and 9.1(c)
20 Canadian Classified Pricing
21 Canadian Classified Pricing
22 Canadian Classified Pricing
23 Canadian Classified Pricing
24 Canadian Classified Pricing
25 Canadian Classified Pricing n Costs –Loss of millions in sales through exports domestic prices –Increase (maintain ???) US-Canada dairy trade tensions. –Increase quota management tensions Need to decrease production (enforce quotas) Or WTO legally increase exports Rock and a hard spot ??? US MMO relevance ???
26 US Classified Pricing
27 Canadian Classified Pricing
28 US Classified Pricing
29 US Classified Pricing
30 Canadian Classified Pricing
31 Summary n Policies similarities, differences n Case studies Yogurt & Ice Cream Tariffication Special Class Pricing n Economic Evidence Full World Dairy Sector Deregulation; US MMO Deregulation. A US-Canada dairy trade liberalization: –work in progress ….