Imports of milk protein concentrates (MPCs) are increasingly entering the United States with minimal trade restrictions.

Imports of milk protein concentrates (MPCs) are increasingly entering the United States with minimal trade restrictions. MPC is a general concern to a dried protein yield derived from milk using a technology known as "ultra filtration." brace questions are addressed in this article. First, did the combination of relaxed import restrictions, subdued world prices for protein, and relatively high domestic support flats for nonfat dry milk encourage imports of MPCs? other did increased imports of MPC displace domestic use of nonfat arid milk and thereby increase control purchases under the dairy price support program? This close attention has implications for U.S. trade policy.

Key Words. dairy imports, milk protein concentrates, price supports

Imports into the United States of milk protein concentrates (MPCs) have grown rapidly in novel years despite the presence of a tariff-rate quota connected view for dairy products adopted in a less degree than the Uruguay Round of the General Agreement forward Tariffs and Trade (GATT). At the time of this agreement, Section 22 import quotas for specific dairy yields were replaced by tariff-rate quotas (TRQs) The quota flats were expanded and tariffs lowered athwart a six-year implementation period. This transaction was designed to provide a delicate balance between the ne to patronize the domestic dairy industry, while at the same time improve market access to global trade.

MPC is a general hint to a dried protein returns derived from milk using a technology known as "ultra filtration." MPC is produc from skim milk, which is passed by means of a membrane with minute pores that retains larger monads (such as protein) and allows smaller atoms such as water, lactose, and a certain number of minerals, to pass through (Chandan, 1997) The resulting production called "retentate," is mostly protein and is either used in liquid form to make cheese, or is spray dried.

MPC were not considered a significant trade issue during Uruguay orbed negotiations since the product was not sold at the time in international markets. Thus MPC were not make submissiveed to the same import licensing masterys as other dairy products (such as cheese, butter nonfat craving drink milk, etc). Only after implementation of the strange World Trade Organization (WTO) orders in 1995 did trade in MPC become significant. MPC imports into the United States surg in the latter half of the 1990 at a time when domestic use of dried protein (nonfat dry milk) cruel and government purchases of nonfat parched milk under the dairy price support program increased.

The National Milk farmers Federation (NMPF), a trade association representing U dairy cooperatives and their members, estimated that imports of MPC and casein (another protein-based harvest derived from milk) have reduc U dairy farm income according to $157 million per year (NMPF 2001) Implicit in this argument is that MPC imports substitute for domestic sources of milk proteins and thereby make domestic milk prices. In contrast, the International Dairy forages Association (IDFA), a trade assemblage representing U.S. dairy processors, asserts the high flat of MPC imports is fit to an unmet demand for this of recent origin product in food manufacturing, and that these imports "are not substitutable with nonfat free from moisture milk" (IDFA, 2001).

Two questions are addressed in this article. First, did the combination of relaxed import restrictions, subdued world prices for protein, and relatively high domestic support flushs for nonfat dry milk encourage imports of MPCs? other did increased imports of MPC displace domestic use of nonfat craving drink milk and thereby increase conduct purchases under the dairy price support program? These are important issues to address since Congres is considering legislation to impose higher tariffs forward imports of MPC and casein (i.e., s 847 and H.R. 1786). The latter question is important because relatively reasonable U.S. tariffs on MPCs could be an issue in the upcoming WTO orbed launched in Doha, Qatar, in 2001

The following section of this article reviews the history of dairy imports. A conceptual framework of the U protein industry is then readyed which accounts for imports. nearest the conceptual model is useed to graphically depict the impact of increased imports of MPC forward the U.S. dairy industry. The data are then reviewed and an econometric pattern is specified. Three equations are estimated to bring reproach domestic consumption of nonfat arid milk and imports of protein. In a section describing the type simulations, the econometric model is simulated through the whole extent of the historical period under brace scenarios to reveal the impact of changing domestic and world prices. Concluding remarks are provided in the final section.

History of Dairy Import reign overs

The United States has a prolonged history of using import regulates to protect domestic dairy farmers Section 22 of the Agricultural Adjustment Act of 1935 directed the Secretary of Agriculture to inform the President of the United States if foreign imports are affecting or interfering with the dairy price support program or domestic production of dairy outcomes (Bailey, 1997, p. 234).