RESTRICTED
WORLD TRADE G/STR/W/26
22May1996
ORGANIZATION(96-1949)
Original: English Working Party onState Trading Enterprises
REPLIES TOQUESTIONS POSED BY
THE UNITED STATES1TOAUSTRALIA2
CONCERNING THE LATTER 'SNOTIFICATION
OFLAWS AND REGULATIONS UNDER ARTICLE XVII
Thefollowing communication hasbeenreceived on9May1996fromthePermanent Mission
ofAustralia.
_______________
1. WenotethatAustralia didnotprovide detailed information onDescription oftheFunctioning
oftheStateTrading Enterprises, under part3ofthe1960Questionnaire, inparticular regarding
howexport prices weredetermined. Could Australia elaborate onthefollowing statements:
a. Australian Wheat Board: "The AWB retains itscontrol overwheat exports, andin
thisregard itsmainobjective istomaximize thenetreturns toAustralian wheat growers
whosellpoolreturnwheattotheAWBbysecuring,developing,andmaintainingmarkets
forwheat andwheat products andbyminimizing costs asfarasispracticable."
Question
Could Australia explain howtheexport price foranyindividual saleandthepoolreturns to
producers aredetermined andhowthese prices relate todomestic prices?
Reply
Theexport priceforindividual 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.
b. Other areas ofinterest notaddressed intheAustralian submission include identifying
long-term agreements andfinancing mechanisms astheyrelate totheAustralian Wheat
Board.
Question
Could Australia provide thisinformation?
1G/STR/W/10.
2G/STR/N/1/AUS.G/STR/W/26
Page2
Reply
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 bytheCommonwealth Government to85percent
ofestimated returns. Theactual borrowings areobtained through normal arrangements applying to
theexportofcommodities.Domesticgraintradingotherthanpoolwheatisnotsubjecttothegovernment
guarantee andisconducted onanormal commercial basis.
c. Wool International: "Export prices forAustralian wool(including woolsoldbyWool
International) reflect supply anddemand. Most Australian woolissoldthrough the
openauction system. However, Wool International isendeavouring tosellforward
byprivate treaty mostofthewoolitisrequired tosellunder thefixedschedule. This
minimizes uncertainty inthemarket byallowing current sales totakeplace inthe
knowledge thatstockpile woolhasalready beensoldfortheperiod."
Question
Could Australia explain howtheauctioning system works andhowprices forother sales are
set,andhowthese prices relate todomestic prices?
Reply
Theauctioning system isconducted ontheopenmarket andprice issetbymarket forces.
The15percentofAustralian wool notsoldatauction issoldinavariety ofways including
directlyfromthewoolproducertoprivatebuyers,electronicselling,tenders,directsaletotheprocessing
millandforward offers bybrokers andmerchants. Theprices forthese salesaresetbythemarket
andrelate directly todomestic prices.
d. Queensland Sugar Corporation: "Asapproximately 80percentofproduct isexported,
theAustraliansugarindustryhassoughttosecuremarketoutletsandsomepricestability
through thenegotiation oflong-term bilateral contracts withcountries. Other export
sales aremade onthebasis ofworld freemarket prices."
Question
Could Australia explain howprices aredetermined inthelong-term bilateral contracts and
howprices forother sales aredetermined, andhowthese prices relate todomestic prices?
Reply
Prices forlong-term bilateral contracts aredetermined bycommercial negotiation between the
Queensland Sugar Corporation andtheimporting authorities/companies inthecountries concerned.
These reflect thecontracting parties 'longer termviewofworld market conditions. Commercial sales
including longtermcontracts arenegotiated tothesatisfaction ofbothparties andthedetails relating
tothese salesarecommercial inconfidence.
Prices forother exports anddomestic salesaremade onthebasis ofworld market prices.
e. Australian Horticultural Corporation. "Attherequest oftheindustries concerned the
Australian Horticultural Corporation currently usesitsexport control powers tograntG/STR/W/26
Page3
andreview licences forexport andtodetermine theconditions under which suchexports
ofapples, pears, citrus andnashi willbepermitted".
Question
Could Australia explain whatcriteria areusedtogrant export licenses?
Reply
Export licences, which areusedasatooltomonitor export quality, areissued toanyone who
applies. Theapplicant, however, cannot bebankrupt orcannot haveacriminal record (i.e.cannot
havebeenconvicted ofacrime inthelastfiveyears).
2. Australian Dairy Corporation
WeunderstandthattheAustralianDairyCorporationalsoadministerstheDairyProduceMarket
Support Fund, anexport subsidy scheme fordairy products.
Question
Does thisprogramme stillexist, andifso,could Australia provide information onhowthe
Australian Dairy Corporation operates thisprogramme?
Reply
On1July1995, newdomestic market support arrangements fortheAustralian Dairy Industry
became operational following theenactment ofnewlegislation andthemaking ofassociated regulations.
Thenewarrangements mean thatexport subsidies (i.e.theprevious market support payments) have
beenterminated.
3. Australian Dried Fruits Board
Weunderstand thattheAustralian Dried Fruits Board alsousedfunds received fromexport
charges andproducer levies forexport market promotion.
Question
Could Australia provide information onhowtheAustralian Dried Fruits Board operates this
programme?
Reply
These promotional activities donotfallwithin thecompass ofGATT Article XVII.
TheAustralian Dried Fruits Board doesnotengage directly inpromotion, butrather reimburses
exporters afterproof ofsuchactivities. TheAustralian Dried Fruits Board hasalsoprovided funds
withtheBritish National Dried Fruit Trade Association forgeneric promotion ofdried fruits inthe
United Kingdom. These promotional activities donotdirectly impact ontheprices ofproducts sold
byAustralian producers, which areonacommercial basis determined bythemarket.