The Office of the U.S. Trade Representative accepted a petition from the National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) to examine India’s failure to follow through on its obligations to provide “equitable and reasonable access to its market” for dairy products. In addition, Indonesia, which has also been pursuing dairy trade-distorting policies, will be included in USTR’s review to assess the country’s compliance with market access obligations.

India has, for many years, maintained unjustified market access barriers to U.S. dairy products, despite receiving preferential access to the U.S. market under a special duty-free trade arrangement called the Generalized System of Preferences (GSP). India abruptly began denying dairy exports in 2003, citing safety concerns, and demanding revised government-issued health certificates. The U.S. government and industry have worked in good faith over the last 15 years to remove this intractable barrier but have been met with a shifting litany of demands not founded on sound science.

Meanwhile, since last year, Indonesia has been advancing a policy aimed at mandating that importers and manufacturers in its country purchase local milk or contribute monetarily to support the local dairy industry, even though this runs counter to the country's World Trade Organization commitments.

GSP benefits come with the expectation that the trading partners using the program comply with a baseline level of requirements, including those related to reasonable market access terms. USTR has rightfully determined that a thorough examination of the countries’ adherence to these terms of the deal is necessary. 

Industry officials praised USTR’s decision to review GSP status for India and Indonesia and are hopeful that the move will force the countries to halt unfair trading practices that harm U.S. farmers.

“Dairy farmers across the country applaud the White House and USTR for taking this step and holding these countries accountable for their unlawful actions,” NMPF president and chief executive officer Jim Mulhern said. “We’ve been wrongly blocked from the Indian market for more than a decade, and Indonesia has recently been heading down a similar route. If these nations refuse to embrace free and fair trade, there must be consequences.”

“We export dairy products to more than 100 countries, and our products are universally recognized as safe,” explained Tom Vilsack, USDEC president and CEO and former U.S. secretary of agriculture. “Exports are essential to rural America’s future, and our government must prioritize the removal of trade impediments like this to foster an open and healthy market.”

The two organizations thanked the Trump Administration for sending a strong message that trade should be a two-way street. They said USTR has the opportunity to lead on other key dairy trade issues, such as tearing down policies erected by Canada that are harming U.S. dairy exports and run counter to what is needed from a modernized North American Free Trade Agreement.

USTR indicated that a public hearing and comment period for the new GSP reviews of India and Indonesia will be announced in an upcoming Federal Register notice.