'Months' to resolve EU butter suspension

Phil Goff

The suspension of New Zealand's $264 million butter trade could take months to resolve, the European Union's Agriculture Commissioner told Trade Minister Phil Goff yesterday.

Mr Goff said last night that he had called Mariann Fischer Boel to express the Government's strong concerns and she had promised that the European Commission would "work at high speed and find solutions as soon as possible".

"Because of the complexity of the issues however, she believed that the matter could take several months to resolve," he said.

Nearly a third of New Zealand's butter is exported to Europe, but the commission suspended trade last week following a European Court of Justice ruling on who could import it.

One of Fonterra's senior executives is flying to Brussels for talks.

Mr Goff said the commissioner undertook to "stay in touch, and to instruct officials to work with the New Zealand Embassy in Brussels towards an agreed solution".

Prime Minister Helen Clark is optimistic after comments from Europe that the suspension should be remedied by September.

An EU agricultural spokesman said earlier that he did not believe there was any danger NZ would not be able to meet its 77,400-tonne quota for butter exports to Europe this year.

"This is a very temporary situation ... It's a matter of weeks rather than months," Michael Mann told National Radio.

Yesterday, Helen Clark said the Government was "leaving no stone unturned" in its efforts to get the suspension overturned. "If it's required to be dealt with at my level then of course I'd deal with it," she said.

The trouble started when the European Court of Justice ruled in favour of German dairy trader Egenberger, which wanted to overturn regulations saying it could only apply in Britain for a licence to import NZ butter.

The court found that was discriminatory, as was Fonterra's exclusive right to import butter to Europe.

The European Commission then suspended all New Zealand butter exports to Europe while it drafts new rules to satisfy the court.

Mr Goff said by doing so European officials were breaching their trade agreement with New Zealand. He said five to six weeks of New Zealand butter stock was currently available for sale in Europe, which "gives us a small breathing time".

Mr Goff said that while he would like to see some flexibility in terms of the suspension, if that wasn't forthcoming he would push for immediate consultation with New Zealand over what form the new regulations might take.

Federated Farmers is warning that Fonterra will lose a significant source of profit, affecting farmer payouts, if the suspension drags on.

President Charlie Pedersen said the track record suggested disputes were eventually sorted out, but caused "considerable disruption".

Fonterra said the level of profit it got from tariff-free sales to the EU had been reduced as a result of changes in the Common Agricultural Policy which had cut the price of butter.

"It's not as profitable as it once was."

- Additional reporting by NZPA