RESTRICTED
WORLD TRADE G/STR/W/15
26March 1996
ORGANIZATION(96-1070)
Original: English Working Party onState Trading Enterprises
REPLIES TOQUESTIONS FROM THE UNITED STATES1ONTHE
ARTICLE XVII NOTIFICATION OFNEW ZEALAND2
Thefollowing communication, dated 7March 1996, hasbeenreceived from thePermanent
Mission ofNewZealand.
_______________
1. AlistoftheNewZealand Dairy Board 's82subsidiary companies and26jointventures is
available, onrequest, fromtheNewZealand delegation. Thisinformation isdrawn fromtheBoard 's
Annual Report 1994/95.
Withrespect tohowtheBoard 'srelationships withitssubsidiary andjointventure companies
affect trade, because theBoard isafullycommercial operation itssubsidiary andjointventure operations
follow thelinesofprivate sector companies. Theyareintended toprovide apresence inthemarket-place
andfurthertheBoard'smarketdevelopmentobjectives.Assuch,theyrepresentalong-termcommitment
bytheBoard tospecific markets. Such operations areintended toincrease NewZealand 'sexports
andvalue-added overtime. Wedonotseethemasaffecting tradeinanyother way. Incircumstances
where market access isrestricted bytariff quotas, suchasintheUSmarket, subsidiaries andjoint
ventures areinvolved inacquiring andusing licences onthesame basis asother domestic agents. In
anopenmarket, exporters candealdirectly withendusers. Thatisnotsoinrestricted markets where
normalmarketconditionsdonotprevail.TheseactivitieswerehighlightedintheUSGeneralAccounting
Office Report of29September 1995 oncheese imports.
2. Acopy oftheNewZealand Apple andPearMarketing Board 's"Guidelines forConsent to
Export Apples andPears" isavailable, onrequest, fromtheNewZealand delegation. These guidelines
include reference totherelevant section oftheNewZealand Apple andPearMarketing Act. Thekey
criteria oftheguidelines isthattheproposal increases thetotalnetincome ofNewZealand export
supplies. Anydecisions taken inrelation toproposals forconsent toexport maybereviewed upon
request, andtheapplicant mayalsoseekjudicial review through thecourts.
3. Export prices forNewZealand 'smarketing boards aredetermined bysupply anddemand forces
intheinternational market-place. Inthecaseofdairyproducts, market prices arealsopartly determined
bythesubstantial depressing effects ofthelarge-scale export subsidy programmes operated byseveral
ofthemajor economies, including theUnited States. Given thecooperative nature ofthemarketing
boardsconcerned,returnstoproducersreflectthepoolingofexportpriceslessmarketingandoperational
1G/STR/W/10.
2G/STR/N/1/NZL.
./.G/STR/W/15
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costs. Inthelongrun,domestic prices willfollow international prices. Buttaking acomparison at
anyparticular timewillinevitably seesome variance withworld prices, whether forseasonal reasons,
quality differences or,insome cases, simply duetothesmall sizeofdomestic demand which makes
localprices more variable.
Inrelation totheHopMarketing Board, wewould point outthatthescale ofthisoperation
needs tobeputinperspective. TheHopMarketing Board represents theinterests ofthe25NewZealand
hopsproducers located inonepartofthecountry (Motueka). Thissmall cooperative takeswhatprices
itcansecure onwhatisaverythinworld market. Wedonotexpect thatdomestic prices willalways
match world prices. TheNewZealand raspberry industry isalsoverysmall inexport terms. Total
exports amounted toonly186tonnes atNZ$800,000 f.o.b. in1994.
While theHopMarketing Board andtheRaspberry Marketing Council havepowers tocontrol
domestic supply, theiractivities -likethose oftheother marketing boards -arenotsubject toany
operational control bytheGovernment. Thus, itisnoteasytoexplain howprices areset.Wewould
emphasize, however, thatinNewZealand themarketing boards operate behind littleornotariff
protection. Domestic prices inthelongrunwillinevitably reflect world prices -thatiswhathappens
withopen borders andnogovernment subsidies. Against thisbackground, webelieve thatthe
NewZealand marketing boards fullymeet theArticle XVII requirement thattheyoperate solely in
accordance withcommercial considerations. Without protection orgovernment support, theycannot
dootherwise andremain viable commercial operations.