U.S. ‘concern’ for N.Z. over Iraqi dairy sales

Press, 3 November 1984, Page 15

U.S. ‘concern’ for N.Z. over Iraqi dairy sales

NZPA staff correspondent Washington

The United States was “optimistic” that some arrangement would be reached with New Zealand on the proposed sale of surplus American dairy products to Iraq, a senior Agriculture Department official has said. The United States is proposing to sell SUSI2 million ($24.6 million) worth of surplus milk powder and butter oil to Iraq, a market New Zealand has built up over the last 10 years. The price a tonne would be the same as New Zealand has been getting for its $26 million a year dairy trade with Iraq, but the United States has offered extended credit to make it easier for the Iraqis to finance the deal, which would be their first with the United States. “We are not in the business of doing that,” said a New Zealand trade official.

New Zealand regards the proposed sale as dumping — even though it would be at market prices — because the milk powder and butter oil would be sold at well below American production costs.

Mr Richard Smith, administrator of the American foreign agricultural service,

said that the proposal resulted from an Iraqi request, and was not conceived as a move to punish European Economic Community countries for dumping their subsidised dairy products, or even to “send them a signal.”

This conflicts with a comment by the United States Ambassador to New Zealand, Mr Monroe Browne, who said in Auckland recently that the deal was a “message” to the E.E.C. about the disruption of world dairy trade. The United States agreed to consult New Zealand over any such sales after concern that earlier deals would disrupt traditional New Zealand markets. Mr Smith said that the main concern in Washington was to avoid harming New Zealand.

New Zealand diplomats in Washington, who have been consulting United States officials on the Iraqi proposal, have passed on the Government’s concern and are waiting for instructions from Wellington, said a trade official.

The retiring Ambassador, Sir Lancelot . AdamsSchneider, mentioned the matter when he made a farewell call on the United States Secretary of State,

Mr George Shultz, said an Embassy spokesman. The call was a courtesy one — welcomed by the Embassy because such farewell calls by ambassadors are generally discouraged — and the matter was raised only in passing, with Sir Lancelot thanking Mr Shultz for consulting New Zealand in advance. The question of port calls by American navy ships was also raised, the Embassy said, but again only in passing. The point was made that consultations would continue. No link had been suggested between the proposed sale and the port visits, said the trade official. The E.E.C. is planning to dump hundreds of thousands of tonnes of dairy products on the Soviet and Middle Eastern market at prices below the minimum set by the General Agreement on Tariffs and Trade./

Mr Smith said that the United States was “one thousand per cent” behind New Zealand in opposing any derogation of the GJLT.T. minimum, but said that in practice it would be impossible to stop the E.E.C. countries. If they do, however, analysts here have said that the United States could retaliate by dumping agricultural produce on traditional E.E.C. markets, a move likely to lead to a full-scale trade war in which countries like New Zealand would inevitably suffer. Mr Smith said that American officials in Geneva had “very clear instructions” to oppose the E.E.C. move, and that the United States was working closely with New Zealand.

The E.E.C. proposal underlined the need for a G.A.T.T. agricultural regime, he said.