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Subsidised U.S. wheat initiative for Kuwait



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MT41 Date:19 June 1991

SUBSIDISED U.S. WHEAT INITIATIVE FOR KUWAIT

The Minister for Trade and Overseas Development, Neal Blewett, and the Minister for Primary Industries and Energy, Simon Crean, have strongly criticised the US initiative to provide 100,000 tonnes of subsidised wheat to Kuwait.

"The initiative establishes an unfortunate precedent in a market which has hitherto not been a target for sales under the US Export Enhancement Program.

"We have therefore strongly registered with the US Administration through our Embassy in Washington our concerns at the implications for Australia of the initiative," Dr Blewett said.

He said that he would be making a personal protest by letter to the US Secretary of Agriculture, Ed Madigan, today.

The Ministers said Australian concerns stem mainly from the price depressing effect the initiative has for Australian sales to the Middle East region, particularly the Gulf - the major

market for Australian wheat exports.

They said the Government was particularly concerned about the potential flow-on effects of this wheat initiative for other Middle East markets.

"This can only serve to compound the adverse impact such initiatives have on the rural sectors of non-subsidising exporters such as Australia.

"The initiative, which represents half of Kuwait's imports, is a setback for Australian hopes of recapturing a share of the Kuwait market which was lost in the late 1980s due to subsidised Saudi Arabian wheat sales," they said.

Dr Blewett said that he was particularly disappointed that the initiative seemed contrary to the spirit of assurances provided to the bipartisan delegation which he led to Washington in early March.

These assurances, subsequently endorsed by President Bush in his letter to Prime Minister Hawke, provided that all possible care would be taken to avoid disruption of traditional markets where Australia has a significant interest, including the Middle East.

"The US has sought to justify the initiative on the grounds that it was aimed at subsidised Saudi wheat and at increasing EC involvement in the Kuwait market. The US has argued that Australia is not currently selling wheat to that market," they

said.

Dr Blewett said that the initiative added urgency to current negotiations on a bilateral consultative process between Australia and the US on agricultural trade issues, including the EEP. The framework for these consultations has yet to be

agreed by the US.

"This is a matter I shall be pursuing with Secretary Madigan," Dr Blewett said.

The Ministers said that Kuwait imports some 200,000 tonnes of wheat and flour on commercial terms each year. Although Australia was Kuwait's major wheat supplier in the early to mid-1980s it has not exported wheat to Kuwait since 1988 when

highly subsidised Saudi Arabian wheat captured the market. In 1989/90, Saudi Arabia exported 134,684 tonnes, the US 53,794 tonnes and the EC 31,500 tonnes.

"The trans-Atlantic subsidy w a r , of which this latest initiative is but another element, continues to cost Australia dearly, and this underlines the importance of a comprehensive outcome to the Uruguay Round, especially on agriculture," the Ministers said.

Canberra