RESTRICTED
WORLD TRADE G/STR/Q1/AUS/2
27November 1996
ORGANIZATION(96-5010)
Original: English Working Party onState Trading Enterprises
Replies toQuestions Posed bytheUNITED STATES1
Concerning theArticle XVII Notification ofAUSTRALIA2
Thefollowing communication, dated 20November 1996, hasbeenreceived fromthePermanent
Mission ofAustralia.
_______________
Question
1. Under thereporting requirement for"Reason andPurpose" fortheAustralian Wheat Board,
wenotethatAustralia onlyprovides information onchanges totheBoard in1989 and1992.
While thisinformation isuseful, could Australia alsoprovide information onthereason or
purpose forintroducing ormaintaining theAustralian Wheat Board?
Answer
The"reason andpurpose" oftheAustralian Wheat Board (AWB) isthatAustralia considers
thatitisthemostappropriate marketing arrangement fortheindustry intheinterests ofwheat growers.
TheAustralian Government hasdecided thatafurther review ofwheat marketing legislation willtake
place in1999-2000. Thisreview willcoincide withthetermination oftheGovernment 'sguarantee
onAWB borrowings, asalready provided forintheAWB 'slegislation. Atthattimetheindustry will
become responsible foritsownfinancing, based onthewheat industry fund, which hasbeeninplace
since 1989 andisontrack toreach A$500 million by1999 toprovide thenecessary capital backing
fortheindustry.
TheGovernment hasputinplace afive-year planfortheindustry withthefollowing main
elements:
(a) reaffirmationoftheGovernment'scommitment,foritscurrenttermofoffice,tosupport
continuation oftheAWB asthemost appropriate marketing arrangement forthe
industry;
(b) adoption ofmeasures in1996-1997 toimprove thecommercialization oftheAWB;
1G/STR/Q1/AUS/1.
2G/STR/N/2/AUS.G/STR/Q1/AUS/2
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(c) settlement in1998-1999 ofthefuture structure oftheAWB andownership oftheWheat
IndustryFundtoapplyfrom1999whentheGovernmentguaranteeonAWBborrowings
ceases; and
(d) implementation ofthenewstructure in1999-2000 withindustry thenresponsible for
itsownfinancing.
2. TheUnitedStatesrequestedinformationfromAustraliaonexportpricinginformation,long-term
contracts,andfinancingmechanismsoftheAustralianWheatBoardinG/STR/W/10.Australia’s
answers tothese questions, admittedly brief, arenotincluded inthenewupdated notification.
Could Australia provide information onthedescription andfunctioning oftheAWB, including:
howexport prices aredetermined, howexport prices compare withdomestic prices, useof
long-term contracts orjointventure investments, financing mechanisms, borrowing authority,
andability tomake credit sales?
Answer
Theexport prices forindividual salesaredetermined bythemarket andprevailing international
prices. Growers whodeliver wheat toapoolreceive oneormore advance payments asdetermined
bytheAWB against theestimated netreturn from thatpool. Thelegislation doesnotsetthelevel
ortiming ofadvance payments. Bothexport anddomestic salesarenormal commercial transactions
withtheprice toprevailing market prices.
Long-term supply arrangements entered intobytheAWB arearrangements bytheseller and
buyer tomake available andpurchase certain quantities ofgrain throughout theperiod oftheagreement
withprices andother conditions ofsaletobenegotiated atthetimeofthesale.Commercial borrowings
usedtofundadvance poolpayments areguaranteed bytheFederal Government to85percentof
estimated returns. Theactual borrowings areobtained through normal arrangements applying tothe
export ofcommodities. Domestic grain trading other thanpoolwheat isnotsubject totheGovernment
guarantee andisconducted onanormal commercial basis.
With regard tofinancing mechanisms, theAWB operates under normal commercial financial
arrangements. Further, theBoard isabletoundertake bothjointventures andcredit sales. Credit
isobtained bytheBoard through various means. Credit canbeobtained through normal commercial
export financing arrangements, including theExport Finance andInsurance Corporation (Australia 's
official export credit agency).
3. Could Australia report onthereason orpurpose forestablishing theNewSouth Wales Rice
Marketing Board?
Answer
TheNew South Wales RiceMarketing Board isestablished under theNew South Wales
Marketing ofPrimary Products Act.Theobjective oftheActistofacilitate thecommercial andefficient
marketing ofagricultural commodities inthebestlongterminterests ofproducers.
Asoutlined indocument G/STR/N/2/AUS, theBoard isresponsible forthereceipt, storage
anddisposal ofallpaddy riceproduced inNSW, onanannual cropbasis.
Itauthorizes theRiceGrowers Cooperative Limited (RCL) tobuy,millandmarket rice,on
anannual basis, initsownright. TheRCL markets riceonbothdomestic andinternational markets
onthebasis ofworld freemarket prices.G/STR/Q1/AUS/2
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4. Could Australia provide information onthedescription andfunctioning oftheAustralian Barley
Board, including description ofthepooling, financing, andmarket development operations?
Answer
TheAustralian Barley Board 's(ABB) pooling system issegregated onthebasisofgrainquality.
TheABB makes advance payments togrowers upon delivery ofthegrain tothepools.
Thecosts oftheABB'sactivities arededucted from theproceeds ofsalesandthebalance is
distributed togrowers. Borrowings tofinance advance payments togrowers aremade oncommercial
money markets andnoGovernment guarantees areinplace.
TheABB'smarket development activities arebased onahighquality marketing service which
matches product specifications tocustomer requirements.
5. Australia identifies anumber ofstatetrading enterprises thatareinvolved inencouraging and
promoting exports. Could Australia provide information onthemagnitude ofthefinancial
support afforded bytheGovernment ofAustralia insupport oftheseefforts foreachofthestate
trading enterprises?
Answer
NoCommonwealthfinancialsupportisprovidedtostatetradingenterprisesnotifiedindocument
G/STR/N/2/AUS toencourage andpromote exports withtheexception oftheAustralian Horticultural
Corporation (AHC) andtheAustralian Wine andBrandy Corporation (AWBC). TheAHC received
A$1.25 million during 1995/1996 financial yearformarketing andpromotion activities. TheAWBC
received atotalofA$1.8 million during thesameperiod formarketing, promotion andexport promotion
activities.
Activities undertaken byalltheother statetrading enterprises arefunded byindustry levies.