Contact: Antonia Ferrier/ (202) 224-5344
Wednesday, June 23, 2004

WASHINGTON, D.C. – In a Senate Finance Committee “mock” mark-up today, U.S. Senator Olympia J. Snowe (R-Maine) said she has grave concerns over the impact of the U.S.-Australia Free Trade Agreement on the nation’s dairy industry.

“I believe the U.S.-Australia Free Trade Agreement could have devastating consequences on Maine’s and, indeed, our nation’s dairy industry,” said Snowe. “I am concerned about the potential increases in the importation of milk protein concentrates (MPCs), which are dried byproducts of milk that can be used in prepackaged mixes and in the production of some types of cheese. Currently, the tariffs on this product are already next to nothing and would in fact go to zero within 18 years under this Agreement.”

Australia is one of the world's largest producers and exporters of MPCs. The U.S. currently ranks third behind the EU and New Zealand in Australian exports of MPCs - keeping in mind that the European Union is now a conglomeration of 25 nations with a population of approximately 450 million people, the fact that the U.S. as a single nation ranks third in Australian exports is worth noting.

According to a letter to Snowe from Dale Cole, President of the Maine Dairy Industry Association, “When processors opt to use imported MPCs, they are using them instead of the fresh domestic byproducts of milk. This lowers the demand for milk overall and leads to a drop in the prices paid to farmers.”

“I recognize that there is language in the US-Australia Free Trade Agreement which some national dairy groups say averts a ‘worst case scenario.’ But in trade agreements, there are winners and there are losers. In this case, I believe the dairy industry cannot be considered a winner,” said Snowe.

To remedy this inequity, Snowe joined 30 other Senators on legislation by Senator Larry Craig (R-ID) that would amend the Harmonized Tariff Schedule to impose tariff-rate quotas and provide various duty rates on certain casein, and milk protein concentrates. Snowe said she will work with Chairman Chuck Grassley (R-IA) and Ranking Member Max Baucus (D-MT) of the Senate Finance Committee who have a Working Group on MPCs to further highlight the dairy industry's concerns.

Snowe did note, however, that there are industries that stand to benefit under this trade agreement, including the wood and paper industry, which is critical to Maine’s economy.

“We must never forget that in the engagement of trade there is a downside - chiefly, that real lives are affected. When Americans become unemployed due to increased imports or plant relocations to other countries, it is often because of trade agreements negotiated by the government of the United States and passed by Congress,” continued Snowe. “I believe we have an obligation to work toward forging a system that provides these trade-impacted Americans with the new skills needed to gain new employment.”

In 2003, the U.S. exported $13.1 billion worth of goods to Australia and imported $6.1 billion in goods making it America’s 13th largest trading partner. In Maine alone, nearly $30 million in goods and services were sent to Australia last year making it Maine's 12th largest foreign market. A key aspect of this agreement is that as soon as it goes into effect, 99 percent of U.S. of manufactured goods exported to Australia would be given immediate duty-free treatment.

Under the Trade Promotion Authority Act of 2002, Congress has the right and ability to make recommendations to the USTR on any trade agreements that the United States enters into. The first stage is the review by the Committees of jurisdiction in each house of Congress, in this case the Senate Finance Committee. As such, Snowe also voted for an amendment by Senator Kent Conrad (D-ND) to prohibit the United States Trade Representative (USTR) from being able to waive quantity and price-based safeguards for beef without approval from the House Ways and Means and Senate Finance Committees.

“Congress has an obligation and constitutional right to exert and direct America’s trade policies,” said Snowe. “As such, I voted for the Conrad amendment, because we simply cannot cede broad discretionary authority to USTR to waive critical safeguards without approval from Congress.”

Under the provisions of the 2002 Trade Promotion Authority Act (TPA), once a free trade agreement is sent to Congress by the President for ratification, it cannot be amended. To ensure that Congress will remain an active participant in the nation’s trade policies, many informal consultation and recommendation mechanisms were instituted. One of those was the “mock” mark-up process, which is a non-binding, informal process that allows the Congressional committees of jurisdiction an opportunity to ask questions of and make recommendations to the Administration before the free trade agreement (in the form of implementing legislation), is officially submitted for passage. The “mock” mark-up operates procedurally the same as a normal mark-up, but any amendments adopted have the power of a recommendation only – the Administration can choose to accept or reject it before sending the official legislation to Congress.

The Senate Finance Committee has yet to vote the trade agreement out of committee.