THE PRESS THURSDAY, JULY 17, 1980. Talks with Mr Gundelach

Press, 17 July 1980, Page 14

THE PRESS THURSDAY, JULY 17, 1980. Talks with Mr Gundelach

The talks which the Government will have today with Mr Finn Olav Gundelach, the Commissioner for Agriculture in the European Economic Community, are likely to be among the most significant to be held with any one person for many years. The Government will try to come to some conclusions with Mr Gundelach. He will not have '-'.the final say over New Zealand’s exports of butter and lamb to Europe. Those who . have the final say are the Ministers of Agriculture of the nine E.E.C. countries who will meet as the Council , of Ministers on July 22. If that meeting fails to arrive at a view on how Europe’s lamb trade is to be handled, the European summer recess would be upon the decision-making apparatus of the E.E.C. and questions that are vitally important to New Zealand will be delayed again. Every delay means the chance of further embroiling' New Zealand’s trade with Europe either in internal E.E.C. rows or in rows between the E.E.C. and other suppliers of the E.E.C. market.

Australia has made a stern threat that, if its sheepmeat trade with Europe is upset, it will retaliate by reducing, imports from Europe. The Australian feeling is understandable. In its trade in sugar and beef in particular, Australia has been badly used by the E.E.C. Subsidised sugar from the beet sugar industry of the E.E.C. has been dumped in third markets to. which Australia hoped to sell. If Mr Gundelach tried to reassure the Australian Government that the proposed sheepmeat regulation of the E.E.C.' would not affect Australia badly, Australia has but a few years to go back before it can find similar assurances on beef. Australia’s once huge exports of beef to the E.E.C. countries have been cut. to. virtually nothing. It is true'that the . threat of retaliation was made/.-by the Deputy Prime Minister, Mr Anthony, who is also Leader of The Country Party, and that Australia has an election at the end of this year, but it would be a mistake to see the threat as a gesture merely designed to impress domestic opinion and farmers in the electorate. How far Australia would be able to switch its sources of'supply may be open to but the will to try to do this cannot be do.ubted.

How the Australian response to the introduction of a sheepmeat regulation will affect New Zealand’s own negotiations cannot be estimated precisely. There is no chance that New Zealand will adopt similar techniques. Its ability to hurt the E.E.C. by limiting imports from E.E.C. countries is much less than Australia’s. Europe also depends on Australian minerals, including uranium, in a way that Europe does not depend on New Zealand’s resources. The possibility that New Zealand might become tarred. with the same brush as Australia cannot be altogether ruled out. However, New Zealand’s traditional manner of coming to terms with the E.E.C. and arranging a deal is too well known to be. forgotten easily. At the moment the best approach seems to be to sit down to talk amicably.

The sheepmeat regulation contains three points that worry New Zealand. The first is on quantity. New Zealand is seeking access for 240,000 tonnes a year, which is an average taken over a number of years. Access to Greece would be added to that after Greece joins the E.E.C. in January, 1981. The second aspect is the size of the tariff. At present New Zealand pays a 20 per cent tariff. A halving of that would bring New Zealand farmers • between $4O million and $5O million a year extra —a figure of significance both to farmers and to the country’s foreign exchange earnings. The card that New Zealand holds in its favour over the size of the tariff is that the sheepmeat regime depends on. the voluntary restraint on exports from New Zealand.

The third aspect is possibly the most serious. It concerns the possible -selling of - subsidised sheepmeat in third countries. New Zealand has seen this happen over butter, as.. Australia has over sugar. Somehow this -has to be avoided in the sale of lamb. The talks with Mr Gundelach will ’also concern butter. The rapid reduction of butter sales in Britain to the target of 90,000 tonnes in 1984 presents huge problems. One must hope that the E.E.C. will keep the problem of butter and sheepmeat separate and will not attempt tradeoffs. It is not a matter of one trade against, another. It is a matter of two fair deals. .