TNAG-0281-FCO40-317-Visit-of-the-Chancellor-of-the-Duchy-of-Lancaster-to-Hong-Ko-1970 — Page 45

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the answer was rather to increase the standard of living and to pay the farmer a proper price. If consumers were sufficiently well off they could afford this price. The policy of keeping food prices down had not profited New Zealand farmers who were increasingly efficient but did not show increasing profits. This was true of British farmers also. Harmonising butter prices in a way which would suit New Zealand was complicated by the high New Zealand standard of living. Matters would be easier when the European standard of living reached the same level. Mr. Marshall reiterated that gradual harmonisation of butter prices was the key to the problem.

Dumping

9. Mr. Marshall emphasised that when phasing other third country suppliers out of the British market it would be important to remember that no comparable alternative markets existed. The quantity displaced would therefore be dumped in markets which currently absorbed only about 110,000 tons. Existing chaos would be compounded if the phasing out process were not gradual. Sir Con O'Neill pointed out that to some extent it would be alleviated by the fact that butter currently being dumped by the Six would be going to Britain. Mr. Rippon expected that changes would in any case be gradual. It was essential that the Community adopt a healthy attitude towards the rest of the world. This meant taking the interests of third parties into account on many matters, including butter. Mr. Marshall hoped that the Community would withdraw from their outside markets to the extent that they entered the British market. Mr. Rippon thought that the best hope for a solution lay in Europeans eating more butter.

10. Mr. Marshall referred to page 57 of the Report No. 19 of the New Zealand Monetary and Economic Council entitled New Zealand and an Enlarged EEC. The New Zealand problem was marginal in relation to the quantities being produced and consumed in the Community. Given the political will a solution to the New Zealand problem could therefore easily be accommodated. The technicalities of such a solution could be left to officials. New Zealand was seeking discrimination in her favour because New Zealand was the only non-subsidised non-dumping butter producer. If, for example, there existed the political will to impose countervailing duties on dumped dairy products in the major markets New Zealand would have no problems at all. New Zealand's current butter sales to Britain were 176,000 tons. New Zealand's butter quota in the United States was 160 tons. Mr. Rippon suggested that the Community might perhaps support an international arrangement over butter. Mr. Marshall said that New Zealand's experience in GATT did not encourage optimism. They had indeed achieved agreement in GATT to a minimum price for milk powders. They were pressing for a similar scheme for butter and butter oil. But they saw no prospect whatsoever of an effective international agreement on the marketing of butter.

Cheese

11. Mr. Marshall said that the New Zealand Government's approach over cheese was similar to their approach over butter but the problem was less acute because smaller quantities were involved and consumption was less affected by price. The Six currently sent 60,000 tons of cheese to Britain every year. Other minor suppliers sent 30,000 tons. If minor suppliers were phased out (and this could be done more quickly for cheese than for butter), this left ample room for increases in exports from the Six to Britain. Indeed given flexibility over the proportion between butter and cheese the fact that cheese was less of a problem might ease the difficulties over butter. Continuation of the voluntary restraint

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