Implications of Reactivating the Dairy Export Incentive Program (DEIP) [May 18, 2009] [open pdf - 178KB]
"Organizations representing dairy farmers are seeking assistance to deal with the situation. Among the requests has been the reactivation of the Dairy Export Incentive Program (DEIP). The principal objective of the program is to develop export markets where the United States competes with exporters who subsidize their products, but DEIP could also increase the U.S. price of milk if enough dairy products are removed from the domestic market. The U.S. Department of Agriculture (USDA) is considering reactivating DEIP and is in the process of consulting with other agencies, including the U.S. Trade Representative's office. Reauthorized through 2012 under the 2008 farm bill (P.L. 110-246), DEIP can be used to subsidize U.S. dairy product exports under certain conditions. Under DEIP, USDA makes cash payments, on a bid basis, to entities that export U.S. dairy products. DEIP has not been active since 2004 because, until late in 2008, market conditions were relatively strong and U.S. trade negotiators have been pursuing the elimination of all agricultural export subsidies as a trade policy objective. The United States' ability to provide export subsidies under DEIP is constrained by World Trade Organization (WTO) limits on quantities and budgetary outlays that can be provided as export subsidies. The allowable quantities and budgetary outlays for agricultural export subsidies, including dairy export subsidies, were negotiated as part of the WTO Uruguay Round Agreement on Agriculture."
CRS Report for Congress, R40584
National Agricultural Law Center: http://www.nationalaglawcenter.org/