THE PRESS FRIDAY, FEBRUARY 7, 1986. E.E.C. dumping report

Press, 7 February 1986, Page 16

THE PRESS FRIDAY, FEBRUARY 7, 1986. E.E.C. dumping report

Little reason exists to doubt whether there is a secret European Economic Community report about dumping 60 per cent of the Community’s surpluses on the world market over the next three years. The Community has been considering a great many options for dealing with the surpluses. Even less reason exists for believing that , if such dumping were done the New Zealand economy would not be devastated. Where there is reason for doubt is that the E.E.C. would put such a proposal into effect How likely the E.E.C. is to pursue such a course would be revealed by an account of the circumstances of the leaking of the report, but no such account has been forthcoming. If the European Commission leaked it as a deliberate act of policy, it could be seen as putting its weight behind this report by the Dutch Commissioner for Agriculture, Mr Frans Andriessen, and the Commissioner for the E.E.C. Budget, Mr Hemming Christopherson, a Dane. If a particular lobby group leaked it, the weight being given to the report might be less. The E.E.C. has surpluses of butter, skimmed milk powder, beef, wheat, barley, rye, sugar, and wine. It is expensive to get rid of the surpluses and expensive to keep them. The beef surplus has grown to such an extent that cold stores have had to be hired in two countries outside the E.E.C., Switzerland and Austria. So the Community subsidises growers to produce the food, pays for the storage of the food, and has to pay as well to get rid of it.

This presents problems of financing. If the E.E.C. sells the food and takes a loss on the subsidies, three sets of external problems are created. If it sells the food to the Soviet Union, the Community is criticised by E.E.C. citizens for allowing Soviet citizens to eat more cheaply at the expense of Western Europeans. Exporting nations such as the United States, New Zealand, Australia, and Argentina are in conflict with subsidised E.E.C. sales. Third, if the E.E.C. sells to markets of developing countires, this harms the domestic production of those countries.

The United States is mainly concerned about cereals and poultry. Australia is mainly concerned about beef and sugar, and New Zealand is mainly concerned about butter and other dairy products, though sales of cheaper beef compete with sales of lamb and mutton. When the E.E.C. sells a huge quantity of beef to the Soviet Union, that country is less likely to buy mutton from New Zealand. Recently, the E.E.C. has been selling beef in some markets in Asia which have hitherto been considered markets primarily for New Zealand and Australia.

If the E.E.C. were to dump huge quantities of food on world markets over the next three years, it seems likely that American patience would be exhausted and the United States would embark on a trade war to break the Common Agricultural Policy. Producers such as New Zealand and Australia would be badly trampled in such a confrontation. The E.E.C. considers that it has treated New Zealand with care in the past, despite views to the contrary within the New Zealand agricultural industry. Dumping on such a huge scale would remove all pretence about fair treatment. The E.E.C. also believes that it has acted in helpful ways to various developing countries and, again, after such dumping, the Community would he hard put to it to be seen as a genuine helper of developing countries. The Common Agricultural Policy, under which the E.E.C. food production is subsidised, was devised as a method of ensuring domestic supply and for the social reason of keeping people on farms. In fact it has distorted world patterns and, despite some attempts at reducing production, the surpluses are still mounting. Sometimes it is argued that the C.A.P. is the glue that holds the E.E.C. together and that, if it were abandoned, the E.E.C. would be weaker and the whole of Europe might be weaker. The time is fast approaching when the E.E.C. has to decide whether it will not only allow the C.A.P. to devour practically all of the E.E.C.’s resources, but also destroy the E.E.C.’s relations with many other countries.