Untitled Document

America was deluged by foreign ice cream last year: 576
gallons came in from New Zealand and 12 gallons from Denmark.
In other words, foreigners "foisted" almost as much ice cream
on "hapless" Americans as a large Safeway sells on a summer
Saturday. Obviously, a crisis was imminent.

While many people relish American-made ice cream with
deliberately foreign-sounding names, few people realize that
the U.S. government restricts ice-cream imports to less than
one-tenth of one percent of U.S. consumption. Jamaica, the
Netherlands and Belgium are the only other countries allowed
to sell ice cream to Americans, and with quotas so low and
transportation costs high, they don't bother to ship us any
ice cream at all.

The U.S. exports hundreds of thousands of gallons of ice
cream to Canada, yet Canadian ice cream is banned from the
U.S. Canada expressed its appreciation for this treatment
last year by slapping a quota on U.S. ice-cream exports to
Canada. (Dairy trade was exempted from last year's Free Trade
Agreement.)

Across North America, armies of bureaucrats have mobilized
to slug this one out. Officials from the Canadian Embassy met
with U.S. State Department officials to raise the ice-cream
issue last October. Canada filed a formal complaint with the
U.S. government in November. The U.S. Agriculture Department
convened a task force that spent months studying ice-cream
quotas.

On May 5 of this year, President Bush sent a letter to the
U.S. International Trade Commission demanding an ice-cream
investigation. The ITC has had as many as 30 people dealing
with this project. The ITC made a report on Aug. 28 to the
U.S. Trade Representative's Office, which is responsible for
forwarding it to the president. According to Claire Buchan,
spokeswoman for the trade rep, "The president has not made a
decision on this, and there is not a deadline." Doesn't he
realize the ice cream is melting?

The U.S. ice-cream quotas date back to Dec. 31, 1970, when
President Nixon decreed that future ice-cream imports could
not exceed 431,330 gallons a year. Why? That year, according
to Deputy Secretary of Agriculture Ann Veneman, testifying
this July before the ITC, the U.S. was hit with a "flood of
imports." This so-called "flood" amounted to barely 1% of
U.S. ice cream consumption.

How did Mr. Nixon decide to limit imports to exactly
431,330 gallons a year? Section 22 of the Agriculture
Adjustment Act allows the U.S. government to protect domestic
price-support programs by restricting imports to 50% of the
annual average imports of a representative period. Ice-cream
imports did not begin until 1969 -- so the U.S. government
chose the years 1967, 1968, and 1969. This allowed the
government to slash imports by 95% of their 1970 level and
then tell foreigners that the 5% remaining was their "fair"
market share.

Under the "free trade" Bush administration, the
Agriculture Department still has a phobia about foreign ice
cream. Deputy Undersecretary Veneman told the ITC, "We
believe that imports above (the current) level would render
or tend to render ineffective or materially interfere with
the domestic dairy price support program."

The ice-cream controversy illustrates the meaninglessness
of some of the central terms in our trade law. In 1983, the
Agriculture Department concluded that imports of roughly 160
million pounds of casein, a dairy derivative, did not
"materially interfere with domestic dairy (price) supports,"
even though the casein imports had far greater impact on the
dairy price support program than did ice-cream imports.

This July, when ITC Chairman Anne Brunsdale pushed
Agriculture Department official John Mengel to explain what
had changed between 1983 and 1989, Mr. Mengel sputtered, "I
think, Madam Chairman, that perhaps budget is a stronger
consideration now." Yet the Agriculture Department a few
weeks later endorsed a $900 million drought bailout to
farmers who had failed to protect themselves by buying crop
insurance.

Given all this controversy, what was the ITC looking at?
Apparently, it looked only at changing the distribution of
the quota -- allowing more countries to compete to sell the
same tiny amount of ice cream to the U.S. Abolishing or
increasing the quota apparently was not even seriously
considered.

In this mega-investigation, the U.S. government has
probably already spent more than a thousand dollars in
administrative expenses for each gallon of ice cream imported
into the U.S. last year. International trade disputes are
rapidly degenerating into a full employment program for
government bureaucrats.

Since 1987, the U.S. has been hollering for the abolition
of all trade-distorting agricultural subsidies. But how can
we tell the Japanese to abolish their rice subsidies or the
Europeans to stop dumping wheat when the U.S. is terrified
over a few scoops of ice cream?

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