EXTENSION OF U.S. DAIRY EXPORT SUBSIDY

PROGRAM TO NEW MARKETS

The Minister for Trade, Senator Bob McMullan, today expressed deep disappointment at the recent U.S. decision to extend its dairy export subsidy program to new markets in Asia and Latin America.

"I will be instructing the Australian Ambassador in Washington to make early representations to relevant U.S. authorities urging that in implementing these guidelines the export subsidies not be applied in new Asian markets," Senator McMullan said.

"The decision by the U.S. represents a very substantial increase in the size of the program.

"With the Uruguay Round commitments coming into force on 1 July, the U.S. has effectively crammed an annual program into the six month period to the end of June.

"But of most concern is that the program has now been extended into the fast-growing markets of Asia where efficient Australian exporters have a substantial presence.

"Depending on the size of the U.S. export subsidies, the Australian dairy industry could stand to lose tens of millions of dollars."

The Minister said that it was hard to see how this decision was consistent with the intent and spirit of the export subsidy commitments entered into under the Uruguay Round.

"It is precisely because of this sort of decision that the Uruguay Round is so important to Australia," he said. The recent ratification of the Uruguay Round agreements guarantees the reduction of such U.S. export subsidies from July this year.

Senator McMullan said "it is very hard to see any justification given the current buoyant conditions in the global dairy industry".

The U.S. Administration has given a number of assurances to the Australian Government that it would avoid action through its export subsidy programs which would harm Australia's commercial interests. In particular, such an assurance was given by President Clinton to Prime Minister Keating in 1993.

Senator McMullan said he would be urging the U.S. Administration to reflect these assurances in the implementation of the dairy export subsidy program.

"This decision runs the very real risk of undermining the positive price developments in dairy export markets. There has, for example, recently been a reduction in European dairy export subsidies in Asian markets.

"The U.S. decision runs counter to that trend and may aggravate the very situation it is designed to combat."

The Government will make an assessment of its future course of action on this matter in light of the U.S. reaction to our representations in Washington.

Senator McMullan added that he would be consulting closely with the Australian Dairy Industry Council on Australian action in response to the recent U.S. dairy export subsidy announcement.

Further information

Senator McMullan's Office Jean Dunn (06) 277 7420

015 264 242

Dept of Foreign Affairs and Trade Justin Brown (06) 261 2177

(06) 288 0053