MT7 29 January 1995

U.S. PROCEEDS WITH SUBSIDISED DAIRY EXPORTS TO AUSTRALIA'S SENSITIVE MARKETS

The Minister for Trade, Senator Bob McMullan, was today critical of the U.S. Administration's decision to go ahead with heavily subsidised exports of skim milk powder to Australia's most sensitive markets - the Philippines, Thailand and Malaysia.

The action follows last week's announcement of a new U.S. dairy export subsidy program for the first six months of 1995.

"I am particularly concerned about the very high level at which the U.S. has pitched the export subsidy - their exporters will be subsidised at around $565 a tonne, which amounts to a discount of $100 a tonne on the current price," Senator McMullan said.

"The Government and the Australian industry consider the subsidy excessive.

"Highly subsidised U.S. exports into these markets will have a significant impact on our dairy industry.

"The Australian Dairy Industry Council estimates the Australian industry could face losses of up to $20 million in a full year."

Senator McMullan said the Philippines is Australia's most important export market for skim milk powder.

"We are traditionally the dominant supplier to that market, so it is inevitable Australian farmers will pay the price for the subsidised US sales."

Senator McMullan said the Australian Ambassador in Washington, Don Russell, and the Chairman of the Australian Dairy Industry Council, Pat Rowley, will make representations to the acting US Agriculture Secretary on Tuesday.

"We will be asking the U.S. how these subsidies fit with their Uruguay Round commitments to cut back export subsidies from July this year.

"Under the new World Trade Organisation rules - effective for the U.S. from 1 July 1995 - the U.S., together with the European Union, will be obliged to significantly wind back export subsidies, including those for dairy products."

Ambassador Russell will convey the Australian Government's serious concerns over the U.S. action, especially considering it comes so soon after international resolve through the Uruguay Round to reform world agricultural trade. The Ambassador will also push the message that the U.S. must take full account of Australia's traditional markets and world prices in their future actions.

Senator McMullan spoke with Mr Rowley yesterday before Mr Rowley's departure for Washington. They discussed how the Government and the Australian Dairy Industry Council can work together to maximise Australia's efforts in Washington.

Senator McMullan will hold a doorstop media conference on the U.S. dairy subsidy issue at the Ministry entrance, Parliament House, Canberra, at 4.00pm, today, Sunday, 29 January 1995.

Further information: John Flannery

(06) 277 7420, 018 482 887, (06) 288 0371