after years of flooding international markets with surplus milk products, the Eu

Question

after years of flooding international markets with surplus milk products, the European Union, under heavy pressure from member nations, has curtailed its $59 billion annual subsidy system for its dairies. This curtailment of subsidies means:

a. an end to tariff barriers

b. European dairy farmers will no longer be protected from international competition

c. dairy products will be given a new customs classification

d. government import standards on dairy product will end

e. an end to voluntary export restraints

Explanation / Answer

Answer b. Because now dairy farmers won't have govt backup to sell product at reduced price and still make margin. They'll have to increase the milk price to make up for the cost of getting the milk from the cattle. Thus they may face the heat of international competition.

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