E.E.C. policy and N.Z.

Press, 9 March 1978, Page 16

E.E.C. policy and N.Z.

The results of the sudden trip of the Minister of Overseas Trade, Mr Taiboys, to Europe to discuss the possible introduction of a sheepmeats policy in Europe will be seen over the next few weeks. It was a trip he had to make. The European Commission had undertaken to discuss the proposed policy with New Zealand and only a few weeks remained before the commission gave its recommendations to the Council of Agricultural Ministers. New Zealand had to say what it could while it could. Considerable attention has been given to the possibility of a “safeguards” clause in the sheepmeats policy. But the most important question for New Zealand is whether the Community will have a sheepmeats policy at all. The aim of the policy would be to regulate the market in sheepmeats throughout the Community The effect on New Zealand would be to bring New Zealand’s biggest export earner under the Community system of dealing with agricultural produce. New Zealand has had painful experience of the Common Agricultural Policy on dairy products and beef. In both instances the prices have risen and demand has dropped. Quotas have also had their damaging effects. One curious aspect of the present moves towards a sheepmeats policy is that the strongest pressure is coming from only one country and from only one organisation within that country—the National Farmers’ Union in Britain. The commission is bound legally to, make a recommendation on the policy but noone is bound to introduce it. British farmers want to get high French prices for their lamb. No-one else is much interested. The Community has used a number of mechanisms in the past to limit imports of agricultural produce. One has been to impose quotas. A second has been to allow for a licence entitlement of only 90 days, which discriminates against countries like New Zealand which are a considerable distance from Europe Another mechanism has been to impose variable levies. Another is to give export subsidies to its farmers, thereby creating the circumstances which make the imposition of quotas or levies more likely. A further mechanism

is to introduce some difficult health regulation designed not to protect anyone’s health but the economic well-being of peasant farmers and the political survival of certain Government Ministers. The use of these mechanisms is to make sure that all third countries are treated as residual suppliers.

Happily New Zealand is protected against a variable levy over sheepmeats. Under the Multilateral Trade Negotiations of the General Agreement on Tariffs and Trade, the E.E.C. is bound to an upper limit of a 20 per cent levy on New Zealand lamb supplied to the Community. If the E.E.C. wanted to renegotiate that agreement, what compensation could it offer? No E.E.C. country should be left in any doubt about the costliness of such an exercise. The variable levy which applies to beef limits the export of beef to Europe as effectively as an import quota. The trade in lamb differs substantially from the trade in dairy products. New Zealand is the major individual supplier of lamb to the E.E.C. It does not face real competition in supply from any European country—unlike dairy products and beef. Thus some of the pressures which come from producer lobbies of dairy products and beef will be absent. New Zealand might realistically hope that some more rational solution should apply to sheepmeats. The biggest fear is that the price may be driven up quickly and that this would lead to a diminished demand for lamb. Mr Taiboys will certainly be pressing his opposite numbers in the E.E.C. for assurances about prices. Apart from restrictions placed on New Zealand trade with the E.E.C., the Common Agricultural Policy has created surpluses which have disrupted not only the; European market but world trade. The surpluses have been dumped on markets to which New Zealand was turning to diversify its outlets. New Zealand’s attempts at diversification could also be thwarted in Greece, which has applied to join the E.E.C. The Community has acted responsibly towards Mediterranean, African, South American, and more recently Pacific nations. It should also do so towards New Zealand.