411.446/7–1951
The New Zealand Ambassador ( Berendsen ) to the Secretary of State
The Ambassador of New Zealand presents his compliments to the Secretary of State and has the honour to refer to certain matters which, insofar as they appear likely to have significant effect upon the opportunities for the marketing of New Zealand dairy products in the United States, are giving serious concern to the New Zealand Government.
[Page 1428]It is understood that legislation has been passed by the Congress of the United States which provides for the continuation of certain emergency wartime restrictions against the importation of fats and oils, including butter, which otherwise would have expired. It is also understood that in extending the present Defense Production Act certain amendments are proposed which would not only continue the present degree of restriction on fats and oil for a further two years, but would also extend the scope of these measures to restrict the importation of other dairy products, including cheese.
The New Zealand Government would be grateful if consideration could be given to the following factors:
The dairy industry in New Zealand has been developed and organized for export production and, together with other agricultural and pastoral industries, forms the whole basis of New Zealand’s economy. In the eighteen months ended June 1950 the value of dairy products exported from New Zealand was over one-third of the total value of all exports in that period. The standard of living of New Zealand and the economic life of the country is substantially dependent upon export outlets throughout the world. In view of this reliance upon export markets, the dairy industry of New Zealand has always maintained great efficiency and the New Zealand products have an excellent reputation in world markets.
The United Kingdom is traditionally the largest purchaser of New Zealand’s dairy produce. Other markets, however, are extremely important to New Zealand, not only for the purpose of maintaining broad trade relationships, but also to enable us to purchase a wide range of import requirements from many countries. Access to all world markets both for exports and for imports is of fundamental importance to New Zealand, and this applies particularly to the maintenance of trading opportunities with the United States.
Prior to the recent World War, New Zealand had a small but regular export trade with the United States in butter and other dairy products. During World War II, and in accordance with the wishes of the Governments of the United States and the United Kingdom, New Zealand’s exports of dairy produce were concentrated in the United Kingdom market. In addition, however, and as a result of strenuous efforts to increase production, large supplies of New Zealand butter and other dairy produce were made available to the American and other Allied Forces.
In the post-war years, when world shortages of basic foods have been a major problem, New Zealand has exerted every endeavour to increase the production of dairy products. Notwithstanding the acute need of the United Kingdom for food products, New Zealand has been anxious to resume trade with the United States even though the quantities of dairy produce available could only have been small. Sales over recent [Page 1429] years of some quantities of cheese and other products to the United States have been valued as representing progress in this direction, and particularly as a means by which New Zealand can earn the dollar exchange with which to make purchases from the United States.
Action by the United States Government not only to continue these restrictions originated under war-time conditions but also to extend the restrictions against the importation of all dairy products from New Zealand, could not fail to have a most profound effect upon the economic strength and welfare of New Zealand. New Zealand has a pressing need to increase its earnings of dollar exchange in order to purchase the raw materials and equipment needed not merely to maintain its standard of living but also to continue its contribution to the common defence effort.
In view of certain statements made in Congress, it is also thought appropriate to point out that the quantities of butter, cheese, and other dairy products which New Zealand could make available to this market are necessarily limited, and indeed would be of minor significance in relation to domestic production in the United States. Furthermore, it is the policy of the New Zealand agency responsible for the marketing of these products to effect sales in an orderly manner, and at current market levels after making any reasonable allowance to the importer for any special commercial risks involved.
Apart from the adverse effects mentioned heretofore, any restrictive action as proposed would be contrary to mutually agreed objectives of reducing trade barriers and, in particular to the letter and the spirit of the General Agreement on Tariffs and Trade. It would tend to neutralize the benefits for which New Zealand has already given concessions under this Agreement. Furthermore, it must not be overlooked that restrictive measures of this nature render more difficult the task of gainsaying those sectional interests which are opposed to the principle of reducing trade barriers.
Opportunity is taken of pointing out that restrictions of the type proposed are likely to add to the forces of inflation which the United States in cooperation with New Zealand and other countries is seeking to combat.
In conclusion, having particularly in mind the present efforts of the United States and New Zealand within the limits of their capacities to fulfil their obligations to resist forces of aggression throughout the world, it is considered that the availability of the United States market for dairy products from New Zealand is of considerable significance, both to the implementation of those aspects of United States policy associated with the current international emergency and also to the supply to New Zealand of raw materials and equipment so urgently needed to fulfil New Zealand’s share in the joint efforts of free countries.
[Page 1430]Although it is earnestly hoped that the proposed restrictions will not be enacted, the New Zealand Government would be grateful for clarification of the position relating to the admission of dairy products covered by existing contractual arrangements, and also relating to shipments in transit or about to be loaded.