Treaties and International Law

WTO disputes with New Zealand as a principal complainant

European Communities - Measures Affecting Butter Products (WT/DS72)

In June 1996, the European Communities ruled that New Zealand butter manufactured by the AMMIX and spreadable butter‑making processes was not eligible for New Zealand’s country-specific tariff quota (CSTQ) for butter established by the EC’s WTO Schedule because it believed that these butter products were not “manufactured directly from milk or cream” (one of the conditions of the CSTQ).

The practical effect of the decision was that these two products would be levied by the EC at the much higher out-of-quota tariff rate. New Zealand disagreed with the EC ruling. After extensive bilateral discussions on this issue the EC confirmed that it would not alter its position. This left New Zealand with no avenue for redress other than WTO dispute settlement.

New Zealand requested WTO consultations in March 1997. When consultations failed to resolve the dispute, New Zealand requested an adjudicative panel which was established in November of that year. The parties to the dispute (New Zealand and the EC) made written and oral submissions to the Panel during 1998. Before the Panel’s Report was made public, New Zealand agreed to an EC proposal to explore a settlement of the dispute. In February 1999, New Zealand requested a suspension of the panel proceedings in order to allow settlement negotiations to take place.

Settlement negotiations were eventually successful, and in November 1999, New Zealand notified the WTO that a mutually agreed solution to the dispute had been reached. As part of the settlement, the EC has passed a regulation which clarifies that New Zealand exports of spreadable and AMMIX butter do qualify for entry under New Zealand’s CSTQ for butter.