Feb 13, 1985
U.S. WITHDRAWS FROM DAIRY ARRANGEMENT.
GENEVA, FEBRUARY 12 (IFDA/CHAKRAVARTHI RAGHAVAN)— Effective February 12 the United States has withdrawn from the international dairy arrangement.-The arrangement, negotiated during the Tokyo Round multilateral trade negotiations, is virtually a producer-cartel, sanctioned by GATT, fixing the minimum sale prices for exports of some of the dairy products.- Its principal members are the temperate climate dairy producer/exporters of the Industrial countries, but also has Argentina and Uruguay as members.- The arrangement has been already in troubles following last year's sales by the European Community of "old butter" from its butter mountain stocks at prices below the minimum fixed under the arrangement, namely 1.200 U.S. dollars per tonne of butter.- Thereupon, the issue was considered by the dairy council last year, and in November 1984, it adopted a resolution authorising other members also to sell below the minimum price in order to maintain their own market shares.- When the Council met Monday to review the situation, the U.S. announced that, in accordance with the 60-days notice it had given, it would cease to be a party to the arrangements, effective February 12.- In a brief comment, the EEC noted that during the Tokyo Round negotiations, the Community had paid "a price" for securing the adherence of the U.S. to the dairy arrangement.- By the U.S. withdrawal, the benefits secured by other members - and for which they had made reciprocal concessions in other areas to the U.S. during the Tokyo Round - would be affected.- The Community did not further elaborate, but clearly plans to raise the issue, the GATT Council, and other appropriate bodies.- The dairy arrangement itself contains no provision, beyond the notice period for withdrawal, on the consequences.- But being an arrangement under GATT, the provisions of the general agreement would be attracted in these matters.- The Community could claim nullification or impairment of its benefits and rights, and under article XXIII seek consultations with the U.S., and failing any solution move GATT for suspension or withdrawal of equivalent benefits it has granted to the U.S.- But beyond flagging the issue at the dairy Council, the Community would appear not to have elaborated further.- Earlier, the chairman of the Council, Denis Greenfield of New Zealand asked whether the 1.200 dollar minimum price for butter should not be reinstated.- Though there was no disagreement with the idea, the dairy Council was unable to take a decision immediately, and agreed that members should consult with each other, and meet at short notice, perhaps sometime next week, when the GATT Committe on Trade and Agriculture will be in session, and policy-level officials from important countries would be in Geneva.- Several members, it would appear, questioned whether simple reinstatement of the minimum price would be sufficient? They felt that it would be necessary to look at the overall functioning of the arrangements and further steps necessary.- Among these steps, it was suggested, was the issue whether the minimum reference price should continue to be in U.S. dollars or whether a basket of currencies would be more appropriate.- It was noted that due to the continuing appreciation of the value of the U.S. dollars for several exporters the equivalent of the minimum price in their own currencies had increased considerably.- Other members noted that in any such substantial review of the arrangement and the minimum price itself, the existence of stocks and their impacts on the market would also have to be considered.- An issue connected with the reinstatement of the minimum price was how to deal with butter sold in the interregnum at below the agreed price but not yet delivered.- The suggestion was that deliveries on such sales should be completed within a specified date to be agreed upon. Australia, which along with Sweden and New Zealand would appear to have affected some sales after the November decision, found itself unable to agree to this.-