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Importers Want Historical License Reduction Provision Eliminated

USDA Proposed Seven-Year Suspension; Fonterra Wants Lottery Replaced With First-Come, First-Served System

While the Cheese Importers Association of America (CIAA) said it was “pleased” to see that a proposed US Department of Agriculture (USDA) rule would suspend, for an additional seven years, the historical license reduction provision, the CIAA “strongly recommends” the elimination of that provision “because it threatens the business of importing high-quality specialty cheeses.”

The CIAA made its recommendation in response to a proposed rule, published by USDA’s Foreign Agricultural Service on December 23, 2014, to amend its dairy tariff-rate import quota licensing program (for more details, please see “USDA Proposes Changes To Dairy Import Quota Licensing Program,” on page 1 of our dec. 26, 2014 issue).

Comments on that proposal were due Monday, February 23, 2014. USDA received approximately two dozen comments.

Section 6.25(b)(1)(i) of the licensed import regulations currently provides that beginning with the 2016 quota year, any historical licensee who surrenders more than 50 percent of the license amount for the same item from the same country during at least three of the most recent five years will be issued a license thereafter in an amount equal to the average amount imported under that license for those five quota years.

USDA’s proposed rule would provide historical license holders additional time to adjust to changing market conditions by suspending the 6.25(b)(1)(i) provision through the end of quota year 2022.

Under the seven-year retrospective proposal, “importers run the risk of losing their historical license if they surrender more than half of a license in 2018, 2019, 2020, 2021, and 2022,” the CIAA stated in its comments.

Even with this extended suspension, the CIAA said it is important that the risk of losing quota allocation be done moving forward from 2023, rather than looking back at license usage during the period of 6.25(b)(1)(i) suspension.

“There have been instances beyond the control of license holders when holders have been unable to use their country quota,” the CIAA noted. “Importers should not be penalized for them.”

The 6.25(b)(1)(i) license reduction provision “erroneously assumes strong demand for dairy imports,” the CIAA continued. “Major changes in market conditions have prevented historical license holders from using their full license amounts.”

In prior years, a weak US dollar, reductions in European export subsidies, weather factors in major dairy-producing countries, and a deteriorating global economy all weighed against dairy imports.

Between 2004 and 2011, tonnage of cheese imports subject to licensing requirements dropped 41 percent, from 125 million kilograms (275 million pounds) to 74 million kilograms (163 million pounds).
In the face of this “sharp decline,”...send me more information