NZ may challenge EU over butter curbs

New Zealand is threatening to go to the World Trade Organisation to challenge a European Union rule that restricts its butter imports, a senior official said today.

A new EU regulation prevents New Zealand shipping more than half its 76,600 metric tons of annual butter quota to Europe before July each year.

Traditionally New Zealand has sent the bulk of its butter exports to Europe during the Southern Hemisphere summer and autumn when its production season peaks.

Butter prices in Europe are predicted to fall from next July when the EU reforms its subsidy system, and there are concerns foreign producers could try to dump butter there before prices drop.

New Zealand trade negotiations minister Jim Sutton said the EU move was illegal and disruptive to a trading partner who supplied just 4% of butter for the market.

“What they are proposing to do is inconsistent with their treaty obligations [under] WTO law and therefore illegal,” Sutton said.

Dairy farmers urged the government to file a complaint to the WTO.

The new rule “has substantially altered” access for New Zealand butter to the EU, the chairman of the Fonterra dairy export co-operative, Henry van der Heyden, said in a statement.

Fonterra, New Zealand’s largest company, is the world’s biggest dairy product exporter.