FARM SUBSIDY REFUSAL SEEN AS N.Z. GAIN

Press, Volume CIX, Issue 31982, 8 May 1969, Page 26

FARM SUBSIDY REFUSAL SEEN AS N.Z. GAIN

fN.Z.P.A. Staff Correspondent)

LONDON, May 7. Should the New Zealand Government decide to grant direct subsidies to the farming industry the move will not go unnoticed abroad.

The reason is simple—successive Governments have used the unsubsidised nature of the country’s farming as a major point in arguing for improved world trading conditions for agricultural produce.

Many people question the value New Zealand has obtained from doing so. A number want to know precisely what has been achieved which would not have been had the New Zealand dairy industry, in particular, been subsidised. Australia, it has been argued, does not appear to have suffered to any great extent through subsiding its dairy industry.

Dealing with this subject it is hard to express gains and losses in black and white terms. Imponderables and shades of grey often predominate. Also most officials who have taken part in major international negotiations in recent years are reluctant to express a publie view on a matter of such potential political controversy. Two points do stand out. The first is the benefit New

Zealand derives in negotiations with the British Government, and the second is the sympathy it obtains in its efforts for a dairy agreement through the General Agreement on Tariffs and Trade. WHITEHALL VIEW According to agricultural experts it is accepted within Whitehall that when New Zealand protests about a cer-

tain trend or development in food trade patterns connected with the United Kingdom there are at least good grounds for inquiry. The fact that New Zealand argues from a base of being demon-

strably the world’s most efficient producer plays a big part in this. When quota and limitation arrangements are being set the moral argument of being the only major supplier with an unsubsidised industry is one which, says a senior Whitehall official, considerably strengthens New Zealand’s case. It is said to have been a factor of considerable influence earlier this year when the British Government decided to establish limitations on cheese imports. There is a widespread feeling in Geneva that the only reason the dairy group of G.A.T.T. continues to discuss the pricing agreement proposal put forward by New Zealand is sympathy for its trading problem, stirred by some degree of conscience that an efficient unsubsidised industry ought not be allowed to go under without some gesture being made. When the last round of G.A.T.T. dairy talks broke up in February, one G.A.T.T. official said: “Everyone feels sympathy for New Zealand and wants to do something ... the problem is what...”

There is little doubt that thia sympathy would to a large extent disappear should New Zealand indulge in massive subsidies, unless it was clearly seen as a move to counteract a loss of markets caused by dumping on an even heavier scale that at present. INDIRECT WAY The Indirect methods of subsidy employed by New Zealand—the availability to the dairy industry of cheap loan finance from the Reserve Bank and production incentives such as fertiliser freight subsidies—are quite acceptable in an international sense. They are, and more importantly are seen to be, of minor significance beside the massive subsiding of European farmers. Australia’s position is vastly different from New Zealand’s. In the case of the

G.A.T.T. negotiations it is thought doubtful that on her own she could have initiated the present round of talks. On the British Market Australia to some extent benefits from New Zealand’s efforts but is in a much stronger position through the large market she offers British goods—to bargain.