E.E.C. deal may hit N.Z.

Press, Volume CXV, Issue 33963, 2 October 1975, Page 2

E.E.C. deal may hit N.Z.

(By

DAVID BARBER,

N.Z.P.A. staff correspondent)

BRUSSELS, October 1.

A long-term trade agreement with Egypt which is being considered by the ■ European Economic Community might have serious implications for New Zealand.

The proposed deal, which includes 20.000 tons of skim-milk powder to be sold at two-thirds of the world market price, might be the first of a series of cut-price food sales to ease the Community’s large stockpiles of food.

Although details of the! Egyptian deal have not been announced, reports in Brussels indicate that it includes one million tons of grain. 75,000 tons of sugar, 10,000 tons of frozen beef, and 3000 tons of Cheddar cheese. It is understood that New Zealand officials in Brussels are watching the situation closely. They are particularly concerned about the inclusion of milk powder in the agreement and the possibility of further moves to lessen the E.E.C.’s mil-lion-ton stockpile of this ■ product.

New Zealand has its own; large surplus of skim-milk : powder. An Egyptian deal, the first of its type, would almost certainly be followed by others. Iran and India have been mentioned in Brussels as possible partners in longterm trade arrangements with the E.E.C. Both are potential or established customers for New Zealand milk powder. It is believed that New Zealand was not consulted [by the E.E.C. about the (Egyptian proposal, despite: I the Community’s declared; aim of close co-operation; 'with a view to orderly mar-; jketing of dairy products. I Reports in Brussels indicate that the proposal is virtually a one-man effort by the E.E.C. Agriculture Commissioner (Mr Petrus Lardinois), who apparently did not consult his Commission colleagues about it. The E.E.C. countries could’ rightly claim Egypt as a tra-j ditional customer and say that sales would not cut; across New Zealand’s inter-: iests. But if attempts were made to reach similar agreements with Iran and India, New Zealand would feel more closely affected. According to reports in [ Brussels, the Egyptian sale would include the sale of 10,000 tons of skim-milk powder in the first year at world prices — at present about SNZ6OO a ton. The Egyptians would get a further 10.000 tons for about SNZ24O a ton — one-quar-

ter of the E.E.C. support price. The E.E.C.. has a plan to sell 100,000 tons of its milk! powder at this rate to governments as a food aid. The Egyptian deal is controversial in Brussels because most of the goods I supplied would be heavily subsidised to cover the difference between world prices and the E.E.C.’s own high internal support prices. Opponents say that longterm export agreements would encourage European farmers to produce more, and thus add to the Community’s surpluses. The general manager of the New Zealand Dairy Board (Mr S. T. Murphy) is in Brussels for talks with E.E.C, officials. Although Mr Murphy today declined to discuss his visit, he is thought likely to raise the Egyptian deal during talks on the world skim-milk powder problem.