NZ Goes To WTO Over Spreadable Butter

International Trade Minister Lockwood Smith has today announced that New Zealand is asking the European Union for formal dispute settlement consultations under the World Trade Organisation over the spreadable butter row.

The request follows the EUs decision to exclude New Zealand butter manufactured by the modern spreadable and AMMIX processes from eligibility for the reduced duties under this country's WTO quota access to the EU.

New Zealand was not consulted over the Europeans step.

"I foreshadowed taking the case to the WTO when the European Agriculture Commissioner Franz Fischler was in New Zealand recently," Dr Smith said.

"The EUs decision is a clear breach of the obligations which it owes New Zealand under the WTO agreement," the minister said.

The EU says that to qualify for reduced duties butter must be made directly from milk or cream.

It claims the spreadable and AMMIX butter are not made directly from milk or cream but Dr Smith said: "I have no doubt at all that these New Zealand products meet this criteria."

The minister said he was disappointed that the EU was sticking to this position.

"We have made intensive efforts to resolve this issue through bilateral contacts. I regret that these have failed to break the impasse between New Zealand and the EU.

"However, Commissioner Fischler and I have agreed that, in the circumstances, the WTO is an appropriate mechanism for the resolution of this dispute."

The EUs decision has substantial costs for the New Zealand dairy industry and, if it stands unchanged, will restrict that industrys ability to take advantage of technological progress in the future.