Washington, March 13 - The EU complained on Thursday that a proposal in Congress would unfairly tax dairy imports, but the U.S. dairy industry says the step would simply close a loophole and put end to European dairy's free lunch.
European Union officials have singled out a provision in the 2008 farm bill, a massive agriculture law being considered by the U.S. Congress, that would expand a fee on milk, cheese and other dairy products to include dairy imports.
Those fees, equal to 15 cents per 100 lbs of farm milk, are used to fund research and promotion programs that aim to boost dairy sales and farmers' bottom line.
But the EU sees its importers potentially shouldering new costs without, due to current trade patterns and import restrictions, getting much in return.
"It is simply not fair to tax European producers to fund a program that boosts domestic consumption ... when there is very limited access to the U.S. domestic market or, as with milk, effectively no access at all," John Bruton, EU ambassador in Washington, said in a statement.
According to the Agriculture Department, cheese imports from the 27 EU member states added up to $773 million in fiscal 2007; other dairy products were $263 million.
The EU was by far the largest source of U.S. cheese imports last year, but European officials complain that their cheese imports are limited by U.S. quotas.
Diplomats are also raising the specter of litigation at the world trade court, where Washington and Brussels have already fought out a number of epic trade feuds.
"Imposing the assessment would be a clear violation of World Trade Organization rules on equal treatment of agricultural products," Bruton said.
But the U.S. dairy industry disagrees wholeheartedly, pointing to similar levies on imports of beef, potatoes and other goods, which so far have triggered no big trade feuds.
"EU producers and processors have benefited for the last 20 years ... look at how much they export into the United States," said Jaime Castaneda, a senior vice president at the National Milk Producers Federation.
An aide with the House Agriculture Committee said the dairy proposal would not violate world trade rules.
NMPF believes importers must begin pulling their weight alongside U.S. dairy farmers, who spend some $270 million a year on the programs.
NMPF predicts that change would cost world dairy importers under $11 million, which it calls "a drop in the bucket" compared to global dairy imports worth $2.3 billion in 2006.
"The greed and selfishness of some are just deplorable," Castaneda said.
The proposal is found in the House of Representatives' version of the farm bill. Lawmakers are still squabbling over several key aspects to the bill, which is nearly six months behind schedule, and the White House has threatened a veto.