MEDIA STATEMENT

5 July 1999

FOR IMMEDIATE RELEASE

Trade Minister Lockwood Smith expressed disappointment at the US’ latest announcement of allocations for a range of dairy products under its Dairy Export Incentive Programme (DEIP).

The US Department of Agriculture announced its allocations for 1999/2000 under the DEIP on 30 June. Under the DEIP, subsidies are applied to designated quantities of dairy products, thereby using Government funds to improve the competitiveness of US dairy exports in international markets.

DEIP bonuses are being made available this year for 76,207 metric tons of skim milk powder, 2,518 metric tons of whole milk powder, 25,475 metric tons of butterfat, and 3,190 metric tons of various cheeses. The US reserves the right to make further allocations over the year 'if conditions warrant'.

“I am frustrated that the US is once again resorting to the use of export subsidies” Dr Smith said.

“I have repeatedly protested to the US Government about the price distorting effects of export subsidies in an already depressed global commodity market. I have written to Agriculture Secretary Dan Glickman a number of times about my concerns, and raised the issue directly with his Deputies again when I met with them in Washington in April.

"Although the allocated quantities fall within WTO rules, the use of any export subsidy undermines the strong messages that New Zealand and the United States have together been sending to other major users of export subsidies such as the EU.

"The Cairns Group is committed to liberalising agricultural trade, including the complete elimination of export subsidies, and the removal of all trade distorting domestic subsidies. This will be a major focus of the WTO agricultural negotiations to commence later this year.

"Although the US has declared its support for those goals, its continued use of export subsidies for its dairy products sends mixed signals to other countries.

“I strongly urge the US to lift its sights and desist from subsidising dairy exports. Such a move would be consistent with the US credentials as a leading proponent of free trade and would set a positive direction for the WTO Ministerial meeting which it will host in Seattle in December 1999," Dr Smith concluded.

ENDS

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