NZ Protests Against US Dairy Export Incentive Programme

New Zealand continues to object to the United States' subsidisation of its dairy exports through its Dairy Export Incentive Programme (DEIP), Trade Minister Lockwood Smith said today.

New Zealand's protest follows this week's announcement by the United States of the 1998/99 round of DEIP export subsidies. DEIP subsidies are applied to designated quantities of products and assist the competitiveness of US dairy exports in international markets.

"While we note that the United States has reduced its DEIP subsidies as required under its Uruguay Round obligations, we will continue to advocate the elimination and prohibition of this and all forms of export subsidies," Dr Smith said.

In 1998/99, the US will subsidise 84,212 tonnes of skimmed milk powder exports (compared with a subsidy allocation for 92,217 tonnes in 1997/98), 29,854 tonnes of butterfat (34,232 tonnes in 1997/98), 5,003 tonnes of whole milk powder, (7,487 tonnes in 1997/98) and 3,350 tonnes of cheese (3,510 tonnes in 1997/98).

Dr Smith said continued subsidisation through the DEIP was particularly disappointing given the US's commitment to the Cairns Group's agenda for the 1999 World Trade Organisation (WTO) negotiations to liberalise agricultural trade. That agenda includes the total elimination and prohibition of all export subsidies and the removal of all domestic subsidies which distort trade.

"What's more, in his speech to the WTO in May, President Clinton supported agricultural trade liberalisation saying that tearing down barriers to global trade was critical to meeting the food needs of a growing world population.

"With that in mind, New Zealand, as a leading proponent of free trade, urges the US to end these DEIP subsidies as soon as possible."

Dr Smith said New Zealand would monitor closely the practical impact of the latest subsidy allocations on world prices and on New Zealand's unsubsidised dairy exports.