Up to now, most of the world's countries exporting milk products to the United States have been forced to pay a levy protecting local production. The financial damage caused to Israel's farmers due to this tax amounted to tens of thousands of dollars.
President Barack Obama was recently asked to solve the problem, and several days ago he signed a presidential memo eliminating the subcharge on exports of dairy products from Israel to the US.
'American colleague nearly gave up'
The memo followed diplomatic efforts on the part of Yaakov Poleg, the Agriculture Ministry's agricultural attaché at the Israeli Embassy in Washington. Poleg managed to prove to the US Trade Representative that the trade agreement between Israel and the US prohibits placing taxes on exports from Israel.
Following the diplomatic efforts, the American authorities agreed this week to remove Israel from the list of countries forced to pay a similar levy in the future.
In addition, the US trade authorities have ordered the return of $17,000 to Israeli export agent Dudu Buch for a levy paid for butter produced by the Tara company.
Buch said Monday, "There is a demand in the US for our butter, mainly because of the kashrut issue. Several months ago, someone at the American customs discovered that there was a levy on milk products. This could have hurt our profitability, and raised doubts among the Americans on whether they should even buy from us.
"My American colleague was under a lot of pressure and almost gave up, saying that if the American system imposed a protection levy it would last forever. I told him that we Israelis can think differently. I turned to the Agriculture Ministry's representative at the Israeli Embassy in Washington, and the matter was dealt with quickly."
The levy is an important policy tool for protecting local production, which is used often by the developed and rich countries. The levy went into effect in May and applies to a series of products, including dairy products.
The levy can be imposed by the power of the World Trade Organization's Agriculture Agreement in order to protect local production against competing imports, which put the local production at risk.
Israel on list of exceptional countries
This levy joins the existing tax on the products it is imposed on. The levy is placed on each product differently, in accordance with its price in the US and the demand for it, with the import value of the same product or a similar competing one dropping bellow a determined threshold or above a determined quantity.
The levy has been placed by the US on most of the world's countries exporting to America, but does not include exceptional countries which have trade agreements with the US which prohibit such a levy. Israel has now joined this list of exceptional countries.
"Thanks to hard work, the American authorities have removed Israel from the list of countries on which the levy is imposed," says Poleg. "Moreover, in light of the fact that Israel was removed from the list through a presidential declaration, there is no fear that it will be placed on us again in the future."
The exports of dairy products from Israel to the US are constantly on the rise, as there appears to be a high demand for Israeli cheese, yogurt and butter. In 2007, the exports of milk products to the US totaled $6 million.