Off the hook over casein

Press, 21 January 1982, Page 12

Off the hook over casein

The ruling by the International Trade Commission in the United States that the United States should not put limits on the amount of casein imported into the country is excellent news for New Zealand. This ruling permits New Zealand to continue sending casein and refined casein to the United States — a trade that is worth about $9O million; it is also a sign that the idea of free trade has won against protectionism. The Dairy Board and the New Zealand Government believed that any fair judgment would find for New Zealand, but fairness is not the first characteristic of world trade that springs to mind. However sound the case, it is a relief that the International Trade Commission issued a four-to-one ruling on the side that favoured New Zealand. The ruling has still to get the American Administration’s approval and pressures may yet be put on President Reagan by the United States dairy industry or by members of Congress. All is not yet won but there are grounds for hope.

The case before the I.T.C. was not directly against New Zealand, but against the imports of casein in general. Because New Zealand supplies half the American imports of casein it was the country most closely affected. Two earlier trade investigations in the United States in the last 18 months have been directed particularly against New Zealand. In all three'instances they have been initiated by American domestic producers. The most significant of the three was that on animal ear tags manufactured in New Zealand, which have attracted an export tax incentive. This case arose before New Zealand had signed the Subsidies Code of the General Agreement on Tariffs and Trade. Through a happy chance the domestic producer was required to show that the imports from New Zealand materially upset sales of the American product. The firm was unable to demonstrate this. The point had been made, however, that the New Zealand

export tax incentive scheme amounted to a subsidy under American law.

The second case was that of New Zealand lamb exports to the United States. This case was brought by the National Woolgrowers’ Association, the charge was the same: that the export tax incentives amounted to a subsidy. Other subsidies were also included. While New Zealand lamb was found to be subsidised, the National Woolgrowers’ Association eventually withdrew its case. The challenge over lamb apparently persuaded the New Zealand Government to sign the Subsidies Code, which meant that in every case brought in the United States, some material harm to the local producer had to be proved. To sign the code New Zealand had to give an undertaking that the export tax incentive would eventually go. Other protectionist measures introduced in the United States included specifications on the use of agricultural chemicals in the Farm Bill. The bill became law just before Christmas without affecting New Zealand’s exports.

New Zealand’s trade with the United States appears reasonably unrestricted' at the moment. There is no present restriction on beef; the lamb exports remain unrestrained; this week’s ruling allows continued entry of casein. No butter is exported to the United States; in fact, considering the deal by which the Dairy Board bought stocks of American butter last year, it may be said that the United States is one of the few countries ever to have sold butter to New Zealand. Cheese exports by New Zealand are limited to 17,000 tonnes a year. No hints have been made that any other manufacturer will bring a case against New Zealand exports. However, the protectionist feelings have not been laid to rest. They are always lurking, waiting for another moment. The warnings being given within New Zealand about avoiding complacency are well founded.