STATE TRADING

replies to Questions^[1] Posed By the European Union regarding
the new and full notification of Australia^[2]

The following communication, dated 21 October 2016, is being circulated at the request of the Delegation of Australia.

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Question 1

The Rice Marketing Board for the State of New South Wales is the sole State Trading Enterprise (STE) notified by Australia.

Could Australia explain what distinguishes it from the six other STEs^[3] notified in 2004 whose monopoly powers have since been removed?

Reply

The Australian Federal Government as well as Australian states and territories have from time to time operated State Trading Enterprises (STE). As the EU notes, the only remaining STE with export marketing powers left in Australia is the Rice Marketing Board for the State of New South Wales (NSW RMB). Historically, STEs in Australia have reflected different industry conditions and make up, different climatic conditions under which the industry operates, as well as different competitive pressures.

The legal basis for the NSW RMB is provided by the State of NSW Rice Marketing Act 1983. Effectively, all rice produced in NSW and not sold on the domestic market is vested in the NSW RMB. A single export licence has been issued by the NSW RMB to Ricegrowers Limited (trading as SunRice). See G/STR/N/9/AUS which covers the NSW RMB and older notifications for Australia's historical STEs.

Question 2

The Department of Foreign Affairs and Trade made a submission to the Government of New South Wales' 2012 review of rice vesting by the Rice Marketing Board which noted that the continuation of rice vesting is inconsistent with Australia's foreign trade policy.^[4]

Has Australia again made this point to the New South Wales Government as part of its current review of the rice vesting proclamation?

Reply

Pursuant to the NSW Rice Marketing Act 1983 and a Proclamation signed by the Governor of New South Wales (NSW) on 16 January 2013, all rice produced in NSW is vested in and is the property of the Rice Marketing Board for the State of New South Wales. This current vesting arrangement is due to expire on 30 June 2017.

Before making a decision on the future of rice vesting, the NSW Minister for Primary Industries has requested that a review be undertaken to determine whether vesting continues to be in the best interests of the NSW rice industry. The NSW Government sought submissions in relation to the review, and these were due on 14 September 2016. The NSW Department of Primary Industries are currently undertaking the review and its findings will be published publicly in late December 2016.

Question 3

Australia's Competition Policy Review's final report of March 2015^[5] and Productivity Commission's July 2016 draft report of its inquiry into the regulation of Australian agriculture^[6] have highlighted the need to address restrictions applying to the export of rice in New South Wales.

With the Productivity Commission questioning the export market price premium generated by the statutory marketing of rice in New South Wales and recommending the repeal of the Rice Marketing Act 1983, what are the reasons for maintaining the Rice Marketing Board for the State of New South Wales?

Reply

As described in G/STR/N/16/AUS, the reasons for maintaining the Rice Marketing Board for the State of New South Wales are that it:

·                encourages the development of a competitive domestic market for rice;

·                ensures the best possible returns from rice sold outside Australia based on the quality differentials or attributes of Australian rice; and

·                liaises with and represents the interests of all NSW rice growers in relation to the Board's functions and objects.

Australian rice is exported at a competitive international price that reflects world markets and conditions. See in particular G/STR/N/16/AUS which demonstrates that the average price for rice imported into Australia was higher than the average price of Australian rice that was exported during 2014-15. The Australian market is open to competition from imports and significant quantities of rice are imported. There are no tariffs or quantitative restrictions applied on the import of rice (HS 1006) into Australia.

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