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Iowa Ag Review

Abstract

I n contrast to the Uruguay Round Agreement on Agriculture of the World Trade Organization (WTO), a successful Doha Round of WTO negotiations is likely to bring major changes in international dairy markets. Some countries protect their domestic producers by using restrictive tariff rate quotas (TRQ) and high over-quota import duties. And large export subsidies allow the European Union and other countries to continue to export dairy products despite high internal price supports. The significant tariff cuts and elimination of export subsidies currently proposed in the Doha negotiations would create notable shortages in international dairy markets in the near term. Rising world prices will undoubtedly generate a supply response in countries with historically strong dairy industries, such as New Zealand and Australia, but it is less clear which other countries will step up to fill the void created by the removal of subsidized products and meet market opportunities created by lower tariffs. Argentina and Chile are two potential beneficiaries of a new WTO agreement. We review key findings of a recent CARD study on these two countries’ dairy sectors and draw lessons for U.S. dairy.

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