The next round of WTO negotiations: What is in it for dairy?

A new round of World Trade Organization (WTO) negotiations are underway with a schedule of tasks to be completed by 2005. To date, good progress has been made, but in order to meet the deadline for completion the U.S. Administration has to receive negotiating authority from Congress. Border measures, such as tariffs, are the biggest obstacle to liberalized trade in dairy products. Most large developed countries use a system of two-tiered tariffs to protect their markets. The system only allows limited access at preferential tariffs, while over-quota tariffs are often prohibitive. Subsidized exports continue to have a significant share of world dairy trade. Export subsidies are among the most disruptive of trade distortions because they punish consumers and tax payers in the subsidizing country and undercut low cost competing exporters. Domestic policy reform by the major players in world dairy markets can have substantial impacts for world dairy markets. Canadian dairy polices will likely change, but not from WTO pressures. Rather internal pressures are more likely to be the basis for change.