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FOR IMMEDIATE RELEASE: February 9, 2004

SCHUMER: WORST-CASE SCENARIO FOR DAIRY FARMERS MAY BE AVERTED IN AUSTRALIA FREE
TRADE AGREEMENT

Agreement appears to preserve most of existing dairy tariff structure; New York dairy farmers had feared that White House would completely open America’s market to a flood of cheap Australian imports

Schumer urged President to ensure that free trade agreement protects NY dairy producers; Warned that giving Australia unbridled access to dairy market would lower prices for NY farmers

US Senator Charles E. Schumer said today that the worst-case scenario for New York dairy farmers has apparently been averted in the newly created free trade agreement with Australia. In response to fears that the agreement would open up New York's dairy markets to floods of cheap Australian imports, a measure that could cost New York dairy farmers billions in lost revenues, Schumer last month urged the President to ensure that the agreement protect US dairy producers from such an influx of Australian imports. Today, the US Trade Representative announced that US tariffs on Australian dairy imports will remain largely intact, a significant victory for US dairy farmers.

"We still have to read the fine print to make sure there are no poison pills here, but it looks like the doomsday scenario we all feared has been avoided," Schumer said. "We told the President that it made no sense to take a bad situation for our struggling dairy farmers and make it even worse. The devil will be in the details, and we'll need to look at every word to check for loopholes once the full agreement is released – but as this point it looks like the Administration responded to what we said."

Australia is the world's third largest dairy exporter and produces large quantities of cheese, butter, nonfat dry milk, and other dry dairy ingredients. Dairy farmers had feared that as part of the free trade agreement he was negotiating, the President would increase Australia's access to New York dairy markets to the point of closing down 25 percent of New York State's dairy farms. In response, Schumer and 30 other Senators representing both parties sent a letter to the President, urging him to ensure that any free trade agreement with Australia protect US dairy producers from a flood of cheap imports.

"The United States is home to thousands of dairy producers, with dairy farmers in every state in the union. We ask that you take into account the livelihoods and families of the many dairy producers in our states in your negotiations," the Senators wrote. "We will be following the U.S.-Australia FTA closely and want to make sure that the dairy industry’s concerns are given the highest attention by your Administration."

The Free Trade Agreement announced today appears to preserve the existing dairy tariff structure, according to the National Milk Producers Federation. According to the US Trade Representative's office, there will be no change in the US above-quota tariff on dairy products subject to quotas like butter, cheese, and skim milk powder. Under the new tariff rate quotas, increases in Australian imports will amount to roughly 0.17 percent of the annual value of US dairy production, or 2 percent of total US dairy imports.

Schumer and other dairy advocates said that it was too soon to tell what the total impact would be of the entire agreement, since it does allow additional access to US markets for Australian exports. Details of the agreement will need to be further studied to fully assess the agreement. "Keeping these tariffs on Australian products entering our market is a victory, no question about it. But we need to take a close look at what increasing Australia's access to our markets will do to our farmers. Until then, the jury is still out."

Milk is New York’s leading agricultural product and produced in every region in the state. New York ranks third in the nation in milk production and its sales account for over 50 percent of the state's total agricultural receipts. The free trade agreement announced today is now subject to approval by Congress and passage of legislation by Australia's parliament.

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