Mitigating the Unfair Trade Practices
of State Trading Enterprises
Recommendations Submitted by the Dairy Trade Coalition To
U.S. Secretary of Agriculture Dan Glickman
On May 31, 1996
State Trading Enterprises
The matter of State Trading Enterprises (STEs) or export monopolies,
such as the New Zealand Dairy Board (NZDB), was left largely unaddressed
by the Uruguay round negotiations. As a result, the competitive position
of U.S. agriculture may be undermined by the practices of STEs in a post-Uruguay
round world to the extent that our dairy industry, despite its many competitive
advantages, is prevented from competing on a level playing field in key
export markets.
STEs often receive preferential treatment from their governments such
as subsidies, tax breaks, statutory authority to act as a monopoly, or
other measures which private sector competitors do not enjoy. Thus, STEs
are able to control price and quantity of product into any targeted market
to the detriment of their non-STE competitors.
The Recommendations
- The Trade Policy Review Body (TPRB), the arm of the WTO which conducts
the periodic reviews of member country trading policies, will meet October
21-22, 1996, in order to review the trading practices of New Zealand. The
U.S. Department of Agriculture, in conjunction with other appropriate federal
agencies, should submit industry documentation on the unfair trading practices
of the New Zealand Dairy Board.
- The United States should not grant any additional access into the U.S.
for any commodity which is sold into the U.S. through monopolistic State
Trading Enterprises (STEs) such as the New Zealand Dairy Board (NZDB) and
withdraw, on their pre-GATT tonnage, their ability to nominate a preferred
importer.
- The DEIP program should be targeted at markets which are most lucrative
to monopolistic STEs.
- The Secretary should make it a top priority of the Department to work
closely with the European Union in order to eliminate STEs during the Singapore
meeting of the WTO. Likewise, the Secretary should consult with the private
sector with respect to the formulation of industry specific remedies that
mitigate or eliminate the unfair trading practices of STEs such as the NZDB.
- The Secretary should assure that the new cheese importing regulations,
consistent with the guarantees provided to cheese exporting countries in
the memoranda of understanding under the auspices of the GATT Agreement,
provide that licenses for import of cheese held by a historical licensee
will not be reduced from the tonnage in effect as of December 15, 1993 without
consent of the licensee, except in the event that it is shown to the satisfaction
of the Secretary of Agriculture that the licensee has engaged in fraudulent
or criminal activity in violation of the regulations governing such licenses.
The DTC applauds the FAS for including Section 6.23(c)(1)(ii), the export
monopoly provision, in the proposed regulations. This paragraph as written
is evidence that the FAS recognizes the unfair advantages enjoyed by export
monopolies such as the New Zealand Dairy Board. The DTC proposes a minor
technical correction to the proposed language; specifically, change "may"
to "shall" as illustrated below.
"The Licensing Authority shall, no later than
30 days after the final rule is published in the Federal Register, publish
a notice in the Federal Register indicating which countries export an article
or articles through such a monopoly, and revise it as necessary."
- The Secretary should conduct a study, in consultation with the private
sector, to determine the effects of the Uruguay Round Agreement on the
Federal milk marketing order system and on America's ability to compete
against countries employing monopolistic STEs such as the NZDB.
- The Secretary in concert with other federal agencies should do whatever
is appropriate to assure that Canada meets its commitments and obligations
under the U.S.-Canada Free Trade Agreement.
- Due to ongoing concerns with bovine spongiform encephalopathy, and
other sanitary issues, the U.S. Department of Agriculture should work with
countries to insure compliance with all applicable U.S. sanitary standards.
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