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Dairy Imports Alleviated Under USDA Rule

The Department of Agriculture’s Foreign Agricultural Service has issued an interim final rule amending the regulations that provide for the issuance of licenses to import certain dairy articles under tariff-rate quotas. Specifically, this rule suspends for an additional year the historical license reduction provision that would otherwise apply beginning with the 2023 quota year to allow license holders additional time to adjust to challenging market conditions impacting the dairy sector.

This rule will effective as of Aug. 30 but FAS will accept comments on it through Sept. 29.

Under FAS regulations, dairy articles subject to TRQs may be entered at the low-tier tariff only by or for the account of a person to whom a license has been issued. Licenses are issued on a calendar year basis and each one authorizes the licensee to import a specified quantity and type of dairy article from a specified country of origin.

FAS issues three types of dairy import licenses: historical, non-historical (lottery), and designated. Agency regulations provide that 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 historical license thereafter in an amount equal to the average amount imported under that license for those five quota years.

However, FAS has suspended this requirement on four previous occasions, most recently for the 2016-2022 quota years, and is now suspending it again through the end of quota year 2023. FAS explains that U.S. retaliatory tariffs on European Union dairy products (which have since been suspended) contributed to the volatile market conditions U.S. dairy importers have faced in recent years and that about 18 percent of historical licenses for such goods would be reduced or eliminated if the license reduction requirement were to take effect.

Source reference: Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc.

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