European Court of Auditors Butter Report

  • Dr Lockwood Smith
Trade

The New Zealand Government does not agree with key findings of the European Court of Auditors' (ECA) report on the conduct of our dairy trade with the European Union (EU), Trade and Agriculture Minister Lockwood Smith said today.

"New Zealand is taking the EU to the World Trade Organisation (WTO) over the Commission's view, which the ECA appears to support, that spreadable and Ammix butters are not eligible for the New Zealand butter quota," he said. "The first hearing of that case will take place in Geneva in June and we are confident of ultimate success. What's more, the UK VAT and Duties Tribunal has already interpreted the quota eligibility criteria in favour of the New Zealand Dairy Board and differently from the view the ECA has taken."

Dr Smith was also critical of the way in which the ECA interpreted the quota requirement that the butter must have a fat content of between 80 and 82%.

"The ECA's view is different from that of the New Zealand Dairy Board and we believe that the ECA's interpretation of the rules has serious methodological flaws. Assessing compliance with the quota requirements raises complex technical and statistical issues which the ECA appears to have completely ignored."

The ECA's findings have led to substantial claims by the EU customs for backduties, particularly for butter which they allege was overfat, which Dr Smith said are out of all proportion to any problems which could possibly have occurred.

"Even were the allegations correct, nobody has been able to identify any loss to EU consumers, farmers or the EU itself. The New Zealand Dairy Board is pursuing this matter through EU legal processes, and the Government has made it clear in London and Brussels that New Zealand does not accept the ECA's analysis of either the liability for backduties or the manner in which the liability has been calculated."

Dr Smith said he was disappointed with the way in which the report had been prepared, saying that the New Zealand Dairy Board had not had any real opportunity to comment.

"The issues covered by this report will be top of my agenda when I meet with the EU agriculture, external relations and finance commissioners in Brussels today," he concluded.