asked Her Majesty's Government:
Whether they can confirm that European butter costs on average four to five times as much as New Zealand butter to produce, and that Community butter is exported to some of New Zealand's traditional markets at heavily subsidised prices to offset this, and, if so, whether they consider this (a) right and (b) consistent with the letter and spirit of Protocol 18 to the British Treaty of Accession.
§ Baroness Trumpington
Comparative data on butter production costs are not available, although it is estimated that the raw material cost of milk to dairies in the Community is broadly some four or five times higher than in New Zealand.
Community butter is exported with the help of export refunds to bridge the gap between Community and world market prices. It is the Government's policy to seek support levels in the Community closer to world market prices, which would reduce the export refunds required. The Government also support the vigorous action which the Community has taken to reduce surplus dairy production by means of quotas. But as long as the Community has substantial surpluses of butter it will be necessary to pay refunds to exporters.
Protocol 18 of the Treaty of Accession was a transitional arrangement which related primarily to measures to be taken up to 1977. Nevertheless, I would point out that the Community, like New Zealand, now participates in the GATT International Dairy Arrangement, which inter alia lays down minimum price provisions, and that New Zealand has been strikingly successful in diversifying her butter exports.