In recent months, the U.S. position has moved toward the short-term goal of freezing such measures at current levels, with the longer term goal of substantial reductions. As pointed out in more detail in Leaflet 5, current U.S. dairy policy is highly dependent upon import restrictions. Otherwise, imports from lower cost countries and from nations with export subsidies would undercut the price support program. These import quotas, which have limited imports to about two percent of U.S. production, are authorized under Section 22 of the Agricultural Adjustment Act of 1933 as amended in 1953. The quotas can be imposed, adjusted, or eliminated only by the President.
Export subsidies are also a feature of U.S. farm programs.
Over the years, the most important of these programs affecting dairy has been PL-480, the Food for Peace Program. Under the Food Security Act of 1985 several new export programs were created, including the Export Enhancement Program, the Targeted Export Assistance Program, and even a Dairy Export Incentive Program. However, these new programs have been used by the dairy industry only on a limited basis. Dairy programs and trade policies of other major countries differ widely. Farm interest rates are discounted by 20-25 percent from market rates.