104. During this first five-year period, it will be open to the Council of the Community, of which we would of course be a member, to make adjustments as between guaranteed quantities of butter and of cheese, provided that the tonnage expressed as milk equivalent corresponds to the total quantities approved for the two products for the year in question.
105. The effect of these arrangements is that New Zealand will still be guaranteed in six years' time minimum sales of 136,000 tons of butter and 15,000 tons of cheese (and considerably more meanwhile). These are minimum guarantees, and depending on market requirements New Zealand may have the prospect of selling more under the normal Community arrangements, especially in the case of cheese. Since we estimate that the price which New Zealand will receive will be substantially above the level of recent years, this will give her the prospect over the five years of total export earnings in our market at or above the level of those which she has enjoyed in recent years.
106. During the third year after our accession, the institutions of the Community will review the butter situation, taking account of the supply and demand position and trends in the major producing and consuming countries of the world, particularly in the Community and New Zealand. They will decide, in the light of this review, on suitable measures for ensuring beyond 1977 the continuation of special arrangements for New Zealand butter. There will be no guarantee for cheese after 1977, but substantial sales are expected to continue as New Zealand cheese does not compete directly with Community production.
107. Among the considerations of which account will be taken during this review will be the progress made towards an effective world agreement on milk products and the question of New Zealand's progress towards diversification of its economy and its exports. The Community have undertaken to make every effort to promote the conclusion of an interna- tional agreement on dairy products; and to pursue a trade policy which will not frustrate New Zealand's efforts to diversify. This should help New Zealand to increase her earnings in other markets.
108. These agreements have been accepted by the New Zealand Government as adequately safeguarding her interests and as a major concession by the Community. Although they have some reservation about the basis for determining the guaranteed price (because they naturally wanted the best possible price), they have expressed their confidence that on the basis of this settlement New Zealand can meet the challenge of British membership of the Communities and have described the agreement as highly satisfactory.
109. The arrangements described
described above represent a satisfactory settlement of the problems raised for New Zealand's butter and cheese exports. The Government have recognised that New Zealand also depends heavily on the British market for her exports of lamb. These three products play a vital role in the economic and social well being of New Zealand.
110. There is no common organisation of the market in the Community for sheepmeat and each member state at present sets its own conditions for entry from third countries. There is however one common element. This
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