US unhappy with milk import norms

Written by Rituparna Bhuyan | New Delhi | Updated: Jan 8 2010, 05:41am hrs
Hectic parleys between trade diplomats may have led to Harley Davidsons being allowed into India and mangoes from the subcontinent to find a place in dinner tables at the United States. But soon, dairy products could become the reason for a duel between Indian trade officials and their US counterparts as the Obama administration expects easing of stringent sanitary conditions imposed by India on import of foreign milk and related derivatives.

India imports foreign milk products, which have drugs, pesticides and heavy metal residues, only below a permissible level benchmarked by international agencies like Codex Alimentarius Commission. Moreover, there are seven other sanitary conditions that have to be fulfilled, before foreign milk products are let into India. The United States Trade Representative office lists these sanitary conditions as trade restrictive. As for the dairy restrictions, India maintains more stringent maximum residue levels on imported dairy products than it does for domestic products, says an assessment made by United States Trade Representative (USTR) office.

In a meeting with the Senate Committee on Finance last November, two nominees of the Obama Administration to the World Trade Organisation (WTO)Michael Punk and Islam Siddiquiassured they will try to gain market access for Made in US dairy products into India. Significantly, USTR Ron Kirk had discussed the issue with his Indian counterpart, commerce minister Anand Sharma, at the Trade Policy Forum meeting held here last October. The US initiative is being seen as an attempt to enter into a nation, known as the largest milk producer.

While Punk will be the chief negotiator from the US for industrial goods trade negotiations (known as Non Agricultural Market Access) at the WTO, Siddiqui will be the chief negotiator for farm products. The Senate Committee has given its green signal for Punk and Siddiquis appointment, which will now have to be approved by the full senate in January. Indian officials maintain that the country will not relax any sanitary conditions related to imported milk products.

The US had asked for relaxation in the Trade Policy Forum meeting. But the commerce ministry officials told them that the standards are necessary for India to protect its population from harmful products. The US only has to comply with the standards to export their dairy products. There is no barrier, said an official. In October 2006, the US had offered that it would attest its dairy products saying that it is for human consumption. But India had rejected the offer.

Apart from the sanitary permits, the import of dairy products does not face any restriction. Effective import duties charged by India on dairy products range from 31% to 68.2%. The sanitary restrictions also protect the 75 million rural families, which account for 98% of Indias dairy output from cheap imports. However, Chinese dairy products are not allowed into India after melamine adulteration was found.

In this background, Punke told the senators that if he is appointed as the US ambassador to the WTO, he would follow up the issue aggressively. I fully recognise the importance of defending and creating jobs, and, if confirmed, will make market access for US products - including dairy - a top priority in our dialogue with India, Punk told New York Senator Charles E Schumer.

Siddiqui, who is of Indian origin, had a similar stand on the issue. I certainly appreciate the importance of improving market access for US producers of high-quality dairy products, including products from New York. I fully recognise the importance of job creation, and, if confirmed, will make market access for US products, a top priority in our dialogue with India, he told Schumer. India is seen as an emerging market for dairy products on growing population and increasing purchasing power amongst middle income farmers.

An analysis by US department of agriculture office estimates that milk consumption in India would be 113 million tonne in 2010-11, an annual increase of nearly 4%.