AGREEMENT in the form of an Exchange of Letters relating to the adjustment of the Agreement concluded in 1980 between the European Economic Community and New Zealand on trade in mutton, lamb and goatmeat

A. Letter N° 1

Sir,

I have the honour to refer to the Exchange of Letters of 17 October 1980 constituting an Agreement between the Community and New Zealand (hereinafter referred to as 'the Parties') establishing provisions relating to the import of mutton and lamb and goatmeat into the Community from New Zealand (hereinafter referred to as 'the Principal Agreement') and to negotiations held between our respective delegations for the purpose of establishing temporary derogations from certain of those provisions concurrent with the implementation of measures to stabilize the European Community sheepmeat sector and to reform the European Community internal sheepmeat regime in order to achieve a unified European Community sheepmeat market. Having regard to the interests of both the Parties in the stability and strength of that market, and on the basis of the above measures being implemented by the Community, I have the honour to propose the following derogations from the Principal Agreement which shall remain in force for the duration of this Agreement.

Clause 1

Temporary derogations

The following derogations from the Principal Agreement shall apply:

A. Access and quantity

In clause 2 of the Principal Agreement, as modified by clause 6 of the Principal Agreement, the ceiling figure of '245 500', representing the annual ceiling, in tonnes, on the total quantity of imports each year into the Community of mutton, lamb and goatmeat from New Zealand, shall be deemed to have been replaced by '205 000'. This ceiling shall be deemed to include a maximum in 1989 of 6 000 tonnes of lamb imported into the European Community from New Zealand in a form which has never been frozen, a maximum of 7 500 tonnes in 1990, a maximum of 9 000 tonnes in 1991, and a maximum of 10 500 tonnes in 1992.

B. Tariff

In clause 5 of the Principal Agreement, the words 'a maximum amount of 10 % ad valorem' shall be deemed to be replaced by the word 'zero'.

C. Price surveillance

With a view to improved sheepmeat prices within the Community, the Parties shall monitor the prices for lamb in accordance with the procedures contained in the Annex to this Agreement and shall consult as necessary in accordance with its provisions.

Clause 2

Consultation

Notwithstanding clause 1.C of this Agreement, either Party may request consultations concerning the operation of this Agreement at any time.

Clause 3

GATT obligations

The provisions of this Agreement shall be agreed without prejudice to the rights of New Zealand and the Community under GATT.

Clause 4

Entry into force

This Agreement shall enter into force on 1 January 1989 and shall remain in force until 31 December 1992 provided that, if either Party gives notice of denunciation of the Principal Agreement in accordance with clause 14 of that Agreement, this Agreement shall cease to have effect on the same date as that on which the Principal Agreement ceases to have effect.

Clause 5 Review

Within six months prior to expiry of this Agreement, its provisions shall be reviewed. In this review, account shall be taken of:

(a) the effects of the reforms of the Community's sheepmeat regime;

(b) the effect of this Agreement upon the operation of the Community sheepmeat market and upon New Zealand's returns from that market; and

(c) the imports into the Community of mutton, lamb and goatmeat from other third countries during the term of this Agreement.

I have the honour to propose that if the foregoing is acceptable to your Government, this letter and your confirmatory reply shall together constitute an Agreement between the Community and the Government of New Zealand on the matter.

Please accept, Sir, the assurance of my highest consideration.

For the Council of the

European Communities

ANNEX

Price surveillance procedure

1. Pursuant to clause 1.C of this Agreement, New Zealand and the European Community will monitor:

(a) the representative market prices for Community-produced lamb in each Member State, such prices to be calculated for each Member State on the basis of the average price paid for such products over each monthly period in that Member State;

(b) the representative market prices for New Zealand frozen lamb carcasses in each Member State, such prices to be calculated for each Member State on the basis of the average prices for such products over each monthly period in that Member State.

2. The relationship between the representative market prices for New Zealand frozen lamb carcasses in each Member State of the Community and the representative market prices for Community-produced lamb in each such Member State (hereinafter referred to as 'the price relationship') will be compared with the benchmark level specified below for each such Member State, according to the region of the Community within that Member State falls. The comparison will be made on the basis of a monthly average of the percentage price relationship between representative market prices for New Zealand frozen lamb carcasses in each Member State and the representative market prices for Community-produced lamb in the same Member State. If this comparison indicates that the price relationship has, in two Member States in the same month, moved below the benchmark levels for those Member States, the Parties shall, at the request of either, enter into technical consultations with a view to determining the factors causing the downward movement in the price relationship below the benchmark level for each of those Member States, whether that downward movement still obtains, and the relative importance of the factors:

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3. When any determination pursuant to paragraph 2 is made, the factors to be taken into account by the Parties shall include traditional and seasonal price relationships and fluctuations, the prices of cuts, the impact of prices of other meats, and other exceptional factors.

4. Should either Party consider that the downward movement of the relationship between prices for New Zealand frozen lamb carcasses and Community-produced lamb below the benchmark levels in the particular Member States under consideration (hereinafter referred to as 'the particular Member States') and their remaining at such lower levels is indicative of a problem, the Parties shall consider any recommendations arising out of the technical consultations for the resolution of the problem. The Parties should in this situation agree on such measures as they consider appropriate to restore the price relationship in those Member States to the benchmark levels, having due regard to the cause or causes of the situation.

5. Should the Parties in the technical consultations fail to reach agreement on appropriate measures to resolve the problem, the Consultative Committee established under clause 10 of the Principal Agreement may be convened at a senior policy level at the request of either Party to give the matter urgent consideration.

6. Should the Parties in the official consultations in the Consultative Committee similarly fail to reach agreement on appropriate measures satisfactorily to resolve the problem, consultations shall be held between the European Community Commissioner for Agriculture and the New Zealand Minister of External Relations and Trade for resolution. If a solution cannot be found, the Commission would then be able to initiate a procedure for appropriate adjustment to the tariff on its being established that the downward movement of the price relationship below benchmark levels in the particular Member States is attributable to the prices at which New Zealand frozen lamb carcasses are being sold in those Member States by New Zealand exporters, provided that the maximum rate of the tariff following any such adjustment shall be 10 % ad valorem.Such adjustment shall remain in effect for no longer than the price relationship remains below benchmark levels in the particular Member States as attributed above.

7. New Zealand and the Community adopt as targets for achievement by the end of 1992 an improvement in the previously defined benchmark levels for the relationship between the representative market prices for New Zealand frozen lamb in each Member State of the European Community as follows:

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B. Letter N° 2

Sir,

I have the honour to acknowledge receipt of your letter of today's date, which reads as follows:

'I have the honour to refer to the Exchange of Letters of 17 October 1980 constituting an Agreement between the Community and New Zealand (hereinafter referred to as ''the Parties'') establishing provisions relating to the import of mutton and lamb and goatmeat into the Community from New Zealand (hereinafter referred to as ''the Principal Agreement'') and to negotiations held between our respective delegations for the purpose of establishing temporary derogations from certain of those provisions concurrent with the implementation of measures to stabilize the European Community sheepmeat sector and to reform the European Community internal sheepmeat regime in order to achieve a unified European Community sheepmeat market. Having regard to the interests of both the parties in the stability and strength of that market, and on the basis of the above measure being implemented by the Community, I have the honour to propose the following derogations from the Principal Agreement which shall remain in force for the duration of this Agreement.

Clause 1

Temporary derogations

The following derogations from the Principal Agreement shall apply:

A. Access and quantity

In clause 2 of the Principal Agreement, as modified by clause 6 of the Principal Agreement, the ceiling figure of ''245 500'', representing the annual ceiling, in tonnes, on the total quantity of imports each year into the Community of mutton, lamb and goatmeat from New Zealand, shall be deemed to have been replaced by the figure of ''205 000''. This ceiling shall be deemed to include a maximum in 1989 of 6 000 tonnes of lamp imported into the European Community from New Zealand in a form which has never been frozen, a maximum of 7 500 tonnes in 1990, a maximum of 9 000 tonnes in 1991, and a maximum of 10 500 tonnes in 1992.

B. Tariff

In clause 5 of the Principal Agreement, the words ''a maximum amount of 10 % ad valorem'' shall be deemed to be replaced by the word ''zero''.

C. Price Surveillance

With a view to improved sheepmeat prices within the Community, the Parties shall monitor the prices for lamb in accordance with the procedures contained in the Annex to this Agreement and shall consult as necessary in accordance with its provisions.

Clause 2

Consultation

Notwithstanding clause 1.C of this Agreement, either Party may request consultations concerning the operation of this Agreement at any time.

Clause 3

GATT obligations

The provisions of this Agreement shall be agreed without prejudice to the rights of New Zealand and the Community under GATT.

Clause 4

Entry into force

This Agreement shall enter into force on 1 January 1989 and shall remain in force until 31 December 1992 provided that, if either Party gives notice of denunciation of the Principal Agreement in accordance with clause 14 of that Agreement, this Agreement shall cease to have effect on the same date as that on which the Principal Agreement ceases to have effect.

Clause 5

Review

Within six months prior to expiry of this Agreement, its provisions shall be reviewed. In this review, account shall be taken of:

(a) the effects of the reforms of the Community's sheepmeat regime;

(b) the effect of this Agreement upon the operation of the Community sheepmeat market and upon New Zealand's returns from that market; and

(c) the imports into the Community of mutton, lamp and goatmeat from other third countries during the term of this Agreement.

I have the honour to propose that if the foregoing is acceptable to your Government, this letter and your confirmatory reply shall together constitute an Agreement between the Community and the Government of New Zealand on the matter.'

I have the honour to confirm that the foregoing is acceptable to my Government and that your letter, together with this reply, shall constitute an Agreement in accordance with your proposal.

Please accept, Sir, the assurance of my highest consideration.

For the Government

of New Zealand

ANNEX

Price surveillance procedure

1. Pursuant to clause 1.C of this Agreement, New Zealand and the European Community will monitor:

(a) the representative market prices for Community-produced lamb in each Member State, such prices to be calculated for each Member State on the basis of the average price paid for such products over each monthly period in that Member State;

(b) the representative market prices for New Zealand frozen lamb carcasses in each Member State, such prices to be calculated for each Member State on the basis of the average prices for such products over each monthly period in that Member State.

2. The relationship between the representative market prices for New Zealand frozen lamb carcasses in each Member State of the Community and the representative market prices for Community-produced lamb in each such Member State (hereinafter referred to as 'the price relationship') will be compared with the benchmark level specified below for each such Member State, according to the region of the Community within that Member State falls. The comparison will be made on the basis of a monthly average of the percentage price relationship between representative market prices for New Zealand frozen lamb carcasses in each Member State and the representative market prices for Community-produced lamb in the same Member State. If this comparison indicates that the price relationship has, in two Member States in the same month, moved below the benchmark levels for those Member States, the Parties shall, at the request of either, enter into technical consultations with a view to determining the factors causing the downward movement in the price relationship below the benchmark level for each of those Member States, whether that downward movement still obtains, and the relative importance of the factors:

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3. When any determination pursuant to paragraph 2 is made, the factors to be taken into account by the Parties shall include traditional and seasonal price relationships and fluctuations, the prices of cuts, the impact of prices of other meats, and other exceptional factors.

4. Should either Party consider that the downward movement of the relationship between prices for New Zealand frozen lamb carcasses and Community-produced lamb below the benchmark levels in the particular Member States under consideration (hereinafter referred to as 'the particular Member States') and their remaining at such lower levels is indicative of a problem, the Parties shall consider any recommendations arising out of the technical consultations for the resolution of the problem. The Parties should in this situation agree on such measures as they consider appropriate to restore the price relationship in those Member States to the benchmark levels, having due regard to the cause or causes for the situation.

5. Should the Parties in the technical consultations fail to reach agreement on appropriate measures to resolve the problem, the Consultative Committee established under clause 10 of the Principal Agreement may be convened at a senior policy level at the request of either Party to give the matter urgent consideration.

6. Should the Parties in the official consultations in the Consultative Committee similarly fail to reach agreement on appropriate measures satisfactorily to resolve the problem, consultations shall be held between the European Community Commissioner for Agriculture and the New Zealand Minister of External Relations and Trade for resolution. If a solution cannot be found, the Commission would then be able to initiate a procedure for appropriate adjustment to the tariff on its being established that the downward movement of the price relationship below benchmark levels in the particular Member States is attributable to the prices at which New Zealand frozen lamb carcasses are being sold in those Member States by New Zealand exporters, provided that the maximum rate of the tariff following any such adjustment shall be 10 % ad valorem.Such adjustment shall remain in effect for no longer than the price relationship remains below benchmark levels in the particular Member States as attributed above.

7. New Zealand and the Community adopt as targets for achievement by the end of 1992 an improvement in the previously defined benchmark levels for the relationship between the representative market prices for New Zealand frozen lamb in each Member State of the European Community as follows:

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