Apparently, it's not enough for Congress to stick its nose in
your wallet. Now, it wants to stick its nose into your refrigerator
and pantry. That would be the result if the Milk Import Tariff
Equity Act, backed by several members, becomes law. The measure
would implement a tariff on ingredients not commercially produced
in the United States. And many of those ingredients can be found in
products sitting in your refrigerator and pantry right now, such as
hot dogs, frozen pizza, baby formula and potato chips.
Even as the United States negotiates free-trade pacts with
Australia, Chile and a host of other nations, this measure would
impose tariffs on milk protein concentrates (MPCs), casein and
caseinates. Casein is the main protein found in milk. Caseinates
are salts of casein. MPCs are milk that has been concentrated to
remove most of the water and some of the lactose and other solids.
These products differ from nonfat dried milk, which is simply dried
skim milk with its basic components.
So why would Congress consider a tariff on products that meet all
U.S. food safety standards but are not produced domestically?
Ostensibly, to protect dairy farmers -- already battered by low
wholesale prices -- from further competition. But this makes little
sense. According to a 2001 General Accounting Office (GAO) report,
these products don't displace milk in the marketplace, and in 1981
the U.S. International Trade Commission found casein imports do not
affect the price of milk. It's simply not the same product as milk
-- dry or otherwise.
Despite past findings, Sen. Charles Grassley, Iowa Republican, has
asked the U.S. International Trade Commission to conduct an
investigation into U.S. market conditions for milk proteins. "Dairy
farmers believe that imports are contributing to pressure on milk
prices," notes a press release issued by Mr. Grassley. "Asking the
International Trade Commission to investigate is an important first
step to resolving the issue." Dairy farmers have been quick to
blame everyone for low milk prices. Recently, the National Milk
Producers Federation "told a congressional hearing that one of the
major problems with the dairy sector is the U.S. Department of
Agriculture's management of several important dairy
Farmers have failed to recognize that overproduction and lower
consumption might have a hand in this dilemma. A tariff wouldn't
contribute to sales of domestically produced milk; it simply would
make these other products cost more. Congress could "help" dairy
farmers just as much by raising tariffs on sewing machines and jet
skis -- although we wouldn't want to give the members any
This tariff also would raise the ire of some of our closest trading
partners, particularly Australia, which has tried to answer our
calls for freer trade by removing many of its barriers only to be
"rewarded" with increased tariffs on products such as lamb and
steel that it exports. It would hamper negotiations toward a
free-trade agreement with Australia and quite possibly invite a
trade dispute in the World Trade Organization.
Restraints on free trade, such as tariffs, do nothing to help
American consumers and extremely little to help American
industries. And in this case, it's even worse. Like cork or rubber
or bananas, these products have no American competitors. No one
anywhere in America loses a job because these products are
imported. Why would we add tariffs that do nothing but drive up
And the damage to your grocery bill could be widespread. Food
producers as diverse as General Mills, Kraft, Hershey and Sargento
Foods have lined up against the tariff. Virtually all of us -- save
a few starving bachelors -- have at least some products made by
these firms in our refrigerators.
If Congress wants to help dairy farmers, there are ways to do that.
Cut the subsidies that contribute to oversupply and artificially
low prices for milk. Allow the shakeout that needs to occur to go
forward. Create a leaner, more efficient, more profitable industry
the American way -- through competition. But don't pretend to help
dairy farmers by driving up the price of a product that has nothing
to do with them.
is a trade policy analyst in the Center for International Trade and
Economics at The Heritage Foundation.