Jun 5, 1985

AGREEMENT REPORTED IN GATT DAIRY CARTEL

GENEVA, MAY 31 (IFDA/CHAKRAVARTHI RAGHAVAN) -- Subject to final Australian approval, the European Community appeared to have got the green signal Friday for the disposal of its huge stocks of butter in storage by sales at prices below the minimum sale prices.

The tentative agreements reportedly reached Friday at the General Agreement on Tariffs and Trade (GATT), would also have the effect of restoring the functioning of the international dairy cartel arrangement, negotiated as part of the 1979 Tokyo Round multilateral trade negotiations.

A GATT spokesman confirmed Friday that the protocol committees of the dairy arrangement had reached tentative agreement on lowering of minimum sale prices of some dairy products, and for enabling the European Community to dispose off, under safeguards, its stocks of "old butter".

The Australian Representatives at these weeks’ talks in Geneva of the protocol committees of the dairy arrangement have reportedly referred to Canberra the tentative agreement, and are to give their final okay by June five.

If the approval comes, it would rescind the dairy arrangement’s resolution of November 1984, which, in effect suspended the operation of the arrangement, following the EEC announcements of sale of "old butter" at below the minimum prices.

Thereafter, early this year the U.S. announced its decision to withdraw from the dairy arrangements.

The GATT spokesman confirmed Friday that the terms under which the November 1984 resolution would be rescinded had been agreed, as also amendments to the minimum prices laid down in the protocols to the dairy arrangement.

An agreement had also been reached on sales of old butter, defined as butter at least 18 months old, at below the minimum prices, and for procedures to amend the minimum prices in the various protocols if there was too much fluctuation in the dollar exchange rates, the spokesman added.

Other participants provided some details of the tentative agreements.

According to the participants in the meeting, there was an agreement to reduce the minimum prices of whole milk powder from 950 dollars per ton to 830, that of butter from 1.200 dollars to 1.000, and that of anhydrous milk fat from 1.400 to 1.200.

The minimum sale prices of skimmed milk powder would remain at the present 600 dollars per ton, and of certain cheeses would similarly be kept at the present 1.000.

While the green-light has been given to the European Community to dispose off its huge butter mountain stocks, at below the minimum sale prices of the agreement, it was understood that a number of conditions to safeguard the interests of others have also been agreed upon.

The Community is to notify in advance any sales of old butter.

Arrangements for such sales should ensure that old butter or fat made from old butter is only consumed in the country of destination.

Also, the amount of old butter sold should not be less than 100.000 tons for any single country, and in the case of fat from old butter it should not be less than 50.000 tons to a single country.

For sales up to 150.000 the delivery period may not exceed 15 months, and for sales above 150.000 tons, the delivery period may not exceed 18 months.

It was also reportedly agreed that if as a result of such sales, other participants found difficulties over their traditional level of sales in those markets, the participants of the dairy arrangements would hold consultations to enable such participants to maintain their traditional volume of sales.

The understandings would last till December 31, 1986, unless repealed earlier.