Analysis of the Impact of European Union and United States Dairy Policies on EU-U.S. Trade in Milk Protein Concentrate

摘要

During 1996-2000, U.S. imports of milk protein concentrate (MPC) increased rapidly. At thesame time, Commodity Credit Corporation (CCC) stocks of non-fat dry milk (NFDM) went from nothing tomore than 500 million pounds. Consequently, U.S. milk producers attributed low milk prices and dairy farmerincome during this period to the increased imports of MPC. U.S. milk producers were especially concernedwith MPC imports for two reasons. First, MPC between 40 and 90 percent protein had been classified insubheading 0404.90.10 of the Harmonized Tariff Schedule of the United States (HTS). Thus, MPC was notsubject to the tariff-rate quotas applied to many other dairy products. Second, MPC produced in the EuropeanUnion (EU) and exported to the United States was eligible for production and export subsidies. Along withthe high U.S. internal milk protein prices maintained by the Dairy Price Support Program, and volatile worldprices of NFDM, these policies created economic rents for trade in MPC between the European Union andthe United States. To test the relationship between these policies and U.S. imports of MPC, these economicrents, which were not directly observable, were estimated by combing a set of identifiable variables: (1) theCCC purchase price, (2) the EU export refund, (3) EU casein production aid, and (4) the world price ofNFDM as expressed by the Western Europe export price. A vector autoregression model was then estimatedusing monthly U.S. imports of MPC and the estimate of economic rents. This estimation showed that nearly40 percent of the variability in U.S. MPC imports was attributable to the estimate of economic rents. Theseresults demonstrate that U.S. and EU policies can not be analyzed in isolation when evaluating the impactof dairy policies on U.S. MPC imports.