Mar 14, 1985
DAIRY ARRANGEMENT UNRAVELLING?
GENEVA, MARCH 9 (IFDA/CHAKRAVARTHI RAGHAVAN)— The international dairy arrangement, a GATT sanctioned producers' cartel, appeared Friday to be in danger of unravelling.At a meeting of the international dairy council, Austria indicated it would be pulling out of the arrangement, which fixes minimum prices for exports of butter, cheese and other dairy products. Austria is a small exporter, and thus its "withdrawal" by itself would have no effect on the international market, though the Austrian exports or failure has a sizeable impact on its own domestic markets. But the Austrian withdrawal follows on the heels of the United States, which has already withdrawn from the arrangement, effective February 12. The U.S. action itself came as a result of an EEC decision last year, to sell "old butter" from its stocks at prices below the 1.200 dollars per tonne fixed under the arrangement. Thereupon, the dairy Council authorised other members too to sell their butter at below the 1.200 dollar price, in order to ensure their own market shares. Since February this year, the members of the arrangement have been trying to reach an agreement over the re-institution of the minimum price, including at what level and other issues. Some of the exporters have suggested that due to the high value of the dollar, the 1.200 dollar price fixed under the arrangement, when translated into other currencies, provides far too high a minimum price. This week, three of the protocol committees under the arrangement (each dealing with one of the dairy products), has been meeting and trying to look at the operation of the price mechanisms, and whether the prices need to be revised. A main proposal before all of them was an Austrian one for reduction of prices. Discussions showed that there was no consensus, with Australia and New Zealand, supported to some extent by Argentina and Uruguay, arguing that there was no prima facie case for reduction, and that while there were some problems, it did not mean the minimum prices were unrealistic. Efficient farmers should not be penalised or prevented from getting remunerative prices for their exports, they argue. Austria then suggested a general suspension of the dairy arrangements, pending a review and satisfactory solution. But this too failed to get a consensus. As a final move, Austria sought for itself a derogation from the arrangement, which would enable it to sell its dairy products at prices below the minimum set. This too was blocked, with several of the present members arguing that they too should be entitled to derogation. Consideration of the issues at the level of international dairy Council, Thursday and Friday, also failed to provide a solution. Austria pressed for a decision on its request for derogation by Wednesday, in time for a debate in the Austrian parliament on Thursday. But others felt the situation was too complicated to obtain a quick decision, and agreed to look at the issues at the next regular meeting of the Council and the protocol committees, at the end of March. Austria then announced that it could not wait till the end of the month, and would be withdrawing from the arrangement. Withdrawal needs a 60-day notice, and Austrians are expected to give this notice now.