Remedies to Counter Dairy Import Competition

Pursuant to a congressional request, GAO reviewed the section 702 provision of the Trade Agreements Act of 1979 regarding underpricing of subsidized imported quota cheese, focusing on: (1) the resolution of a complaint that the price of imported Swiss cheese has been undercut; (2) the effectiveness of the section 702 remedy; and (3) other remedies for countering unfair dairy import competition. GAO found that: (1) the Secretary of Agriculture has determined that the complaint was justified; (2) the U.S. government has asked the Swiss government to correct the underpricing, which the Swiss government has done; (3) except for two concerns, the complainant is satisfied with the outcome of its complaint and has stated that the section 702 filing process is straightforward, easier, and less expensive than other remedies; (4) the section 702 remedy is effective and not burdensome to the complainant or the government investigator if the foreign government cooperates; (5) the remedy is not often used because imported cheese prices usually compete fairly with domestic cheese prices, domestic producers cannot detect unfair price competition or are unaware of the remedy, and the quota system effectively aids the cheese industry; and (6) other available remedies are more complex and time-consuming than the section 702 provision due to the need for more evidence from the complainant or government investigation, public hearings, and determinations of adverse impact.