Media Statement
17 December 2003

EU butter moves disappointing

New European Union restrictions on New Zealand butter exports are extremely disappointing, Trade Negotiations and Agriculture Minister Jim Sutton said today.

Mr Sutton said New Zealand exports to the EU were only 4% of the butter consumed there, so could hardly be described as a threat to the EU market.

"While New Zealand is supportive of the reforms of the EU's Common Agricultural Policy agreed earlier this year ? and I have made this clear again to EU Commissioners recently in my meetings in Rome ? we are concerned that the EU seems to have taken CAP reform as a license to make changes which could disrupt our trade."

The EU has sub-divided the annual butter quota to prevent more than 55% of the volume entering in the first half of 2004. It claims that this is justified to remove an alleged incentive to import butter early in the year when prices are likely to be higher than after the EU intervention price reductions programmed for 1 July. The regulation requires the splitting of the quota for the next four years while programmed price cuts are carried out. Exports of butter above the quota volume are uneconomic ? they face a tariff of €1,896/tonne, which is equal to a tariff of about 150% at today's prices.

Mr Sutton said that not only were the European moves likely to restrict commercial operations and cut across long-term contracts with EU retailers, they were also inconsistent with the EU's obligations under the WTO.

"WTO members are not permitted unilaterally to alter the commitments they undertook during negotiating rounds. The "binding" of the annual butter tariff quotas by the EU was an important result of the Uruguay Round for New Zealand.

"We will be making it quite clear to the EU directly and through the WTO that its actions are inappropriate. I have asked officials to discuss the EU moves with the New Zealand dairy industry and make recommendations on the appropriate action to take. Concessions negotiated in the WTO cannot be the subject of arbitrary action by any of our trading partners."

ENDS

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