EU lifts ban on NZ butter imports

A temporary ban on New Zealand's multi-million dollar butter imports to the European Union has been lifted enabling trade to continue uninterrupted, at least in the short term.

The imports were stopped last week when a European Court of Justice ruling found that parts of New Zealand's market access agreement were invalid.

Dairy giant Fonterra said the ruling was unjustified and sent top executives to Brussels to sort the matter out.

EU officials have now agreed to lift the ban while a permanent resolution is found.

European Commission agriculture spokesman Michael Mann said today that the decision to lift the ban cleared the way for about 20,000 tonnes of New Zealand produce already in Europe, or on its way there, to be sold.

"That means that there will be no disturbance of trade at all and that New Zealand butter will be able to be sold in the European Union until at least around October by which time we hope we will have a permanent solution in place for the rest of the quota, or failing that, at least a temporary solution for the rest of 2006," he told National Radio.

Welcoming today's news, Trade Minister Phil Goff said it took away the risk of consumers switching brands while the ban was in place.

Nearly a third of New Zealand's butter exports, worth about $264 million, were jeopardised by the ban.

Mr Goff said he had stressed in a conversation with Mrs Fischer Boel on Monday the ban needed to be lifted so New Zealand's butter trade was not interrupted.

He had been sent a copy of the EC's draft resolution.

It stated import licences needed to be issued for New Zealand butter, which had been issued with a New Zealand compliance certificate before July 12 and had left New Zealand before that date, "in order to protect the legitimate expectations of the operators concerned and to provide for smoother trade flows while respecting the judgement of the Court of Justice".

Mr Goff said he had been told last night the resolution was coming and Mr Mann had announced it today, even before it went to the full commission.

Mr Goff said about 43,000 tonnes of butter was sent to Europe in the first half of the year, leaving around 34,000 tonnes to go.

Of that 6000 tonnes was in bonded warehouses with an import licence allowing it to be sold in Europe.

Another 14,000 tonnes was either on the water or in bonded warehouses that did not have an import licence.

"So a total there of 14,000 (tonnes) that we weren't able to sell unless they were flexible about their resolution," Mr Goff said.

The decision to issue an import licence for this product gave New Zealand more "breathing space" until new regulations, needed after the court ruling, were put in place.

Mr Goff said it would be "difficult but not impossible" to get these in place before New Zealand's butter stocks in Europe ran out.

There would "certainly" have been an interruption of trade if the ban had not been lifted, he said.

- NZPA