RESTRICTED
WORLD TRADE G/STR/Q1/USA/3
3October 1996
ORGANIZATION(96-3985)
Original: English Working Party onState Trading Enterprises
Replies toQuestions Posed byNEW ZEALAND1Concerning
theArticle XVII Notification oftheUNITED STATES2
Thefollowing communication wasreceived on25September 1996fromthePermanent Mission
oftheUnited States, witharequest thatitbecirculated toallMembers.
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Q1. Wewould appreciate some clarification ofwhatisintended bythisreference -itisnotclear
touswhatthedifference isbetween thedomestic price andthe"world market price" prevailing ina
country. Does thisexpression relate totheprices offered byunsubsidized competitors?
A1. Theworld market price inthecontext thatitisusedrepresents anactual orderived landed
price ofthecommodity atapoint intimeinatargeted country. Since theEuropean Community (EC)
accounts foraround 40percentofalldairy export salesthe"world market price" largely reflects EC
export prices. However, totheextent thattheECattempts tomaintain competitiveness (byadjusting
export rebates) vis-à-vis major competitors, theworld market price doesbydefault encompass prices
offered byunsubsidized competitors.
Q2. CantheUnitedStatesconfirmthatthepricegapbetweenprocuringandtransportingUSproducts
toaspecific country orregion, andtheprice prevailing inthatcountry orregion, differs depending
onthecountry orregion atquestion? Does theoperation oftheDEIP provide forvarying levels of
bonuses toexporters depending onthese price differences, evenwhere itisthesame commodity being
exported?
A2. Yes,the"price gap"orbonus levelvaries between countries andregions. There areahost
ofreasons thatmayaccount fordifferent bonus levels, butasageneral rule,thegeographic disposition
ofacountry isakeydeterminant factor since ittends toimpact onthetransportation costoftheUS
product. Clearly countries suchasgeographically proximate asMexico haveanarrower price gap
incomparison toother distant countries suchasEgypt.
1G/STR/Q1/USA/2.
2G/STR/N/1/USA