Summary: Pursuant to a congressional request, GAO provided information on: (1) the arrangement agreed to in the Uruguay Round for an increased allocation of cheese to U.S. importers and the effect of this arrangement on the U.S. dairy industry; (2) U.S. trade remedies that are available to protect the dairy sector and the extent to which they have been applied to cheese imports; (3) the operations of one state trading enterprise in the United States; and (4) ways that the Dairy Export Incentive Program (DEIP) may best be used as export subsidies decline. GAO noted that: (1) the Uruguay Round Agreement allows most exporting countries to designate the importers that the Department of Agriculture (USDA) will license to import the additional cheese allocated under the Uruguay Round agreement; (2) there are a number of trade remedy laws that are available to protect the U.S. dairy industry and USDA milk price support program from import competition which allow for investigations of trade practices that may negatively affect the U.S. dairy industry; (3) the New Zealand Dairy Board is chartered by the New Zealand government to be the sole exporter of New Zealand dairy products and operates a wholly owned subsidiary in the United States; (4) as the sole exporter, the Board ensures that the price of New Zealand cheese is not bid down by numerous New Zealand processors competing for overseas sales; and (5) USDA has made several changes to DEIP to make it a more useful tool in maintaining the level of U.S. dairy exports in the post-GATT environment of declining export subsidies.
