Effects of Proposed Trade Barriers for
Milk Protein Concentrate and Casein
Imports on the U.S. Dairy Industry
To be presented at the
American Agricultural Economics Association Annual Meeting
July 28 to 31, 2002
Long Beach, CA
Joseph V. Balagtas, Bradley J. Rickard, and Daniel A. Sumner
All are in the Department of Agricultural and Resource Economics, University of
California, Davis. Sumner is also Director, University of California Agricultural Issues
Center. E-mail: dan@primal.ucdavis.edu
1
Introduction
Tight import barriers cover many milk products, but import quotas or prohibitive
tariffs have not covered imports of a variety of high-protein specialty products. These
products without tariff rate quotas include various casein and milk protein concentrate
products. In recent years, imports of milk protein products into the United States have
received increasing attention from U.S. dairy interests.
A recent United States General Accounting Office (USGAO) study presented data
on these imports and discussed the uses of imported milk protein concentrate products.
Further, proposed legislation has been introduced in Congress that would restrict imports
of casein and other protein products for the first time (S847 and HR1786). This
legislation proposes to revise the U.S. HTS to include a tariff-rate-quota system
This paper models effects of imports on U.S. prices and production of milk
protein, on government purchases of dairy products, and on the production, prices and
incomes of U.S. milk producers. We conduct the analysis using a simulation model that
investigates implications of trade barriers on a number of aggregate measures.
1. Imports of Milk Protein and the Domestic Dairy Situation
Dairy protein products are imported into the United States with low or no tariffs
under four eight-digit HTS codes. Table 1 lists these categories, along with their current
tariff rates. MPC4 (HTS 0404.90.10) includes processed milk products containing
between 40 percent and