Jun 1, 2004 1:13 PM, from staff and wire reports

United States dairy officials hailed the US-Central America Free Trade Agreement (CAFTA) as one that will expand overseas markets for US dairy products.

“With growing dairy demand, deficit domestic production, and geographical proximity, the Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua are natural export markets for the United States,” says Tom Suber, president of the US Dairy Export Council.

Signed May 28, the agreement will grant immediate new access to US exporters for more than 2,600 metric tons of cheese, about 4,800 tons of milk powder, 820 tons of butter, 760 tons of ice cream, and 980 tons of other dairy products. Tariffs for these sensitive products will be phased out to zero, and tariff-rate quotas will grow over 20 years. In addition, the United States gets unrestricted access (zero duty) for whey, lactose, and certain cheeses, among other products.

Strong rules-of-origin language in the deal will prevent other dairy suppliers from trans-shipping products to the United States through Central America. Central American dairy industries are unable to supply their own growing domestic demand; therefore they are unlikely to ship significant quantities to the United States.

“US dairy exports to the CAFTA countries average $35 million per year, despite restrictive tariffs and quotas,” says Jerry Kozak, chief executive officer of the National Milk Producers Federation. “CAFTA should enable us to grow that number considerably.”

Now that the bill is signed, President Bush must submit the agreement to Congress for approval.