The 1995 Hungarian budget provided for export subsidies to over 300 agricultural products, with an allocation of 35 billion florints (US$280 million). This allocation put Hungary in breach of its Uruguay Round commitments on export subsidies, which limit export subsidies to 16 agricultural products, at levels falling from 21.0 billion florints in 1995 to 14.3 billion florints in 2000. Hungary’s budgeted export subsidies for 1996 again exceeded these levels.
New Zealand and a number of other WTO Member countries had been actively involved for almost 20 months in seeking ways for Hungary to bring its export subsidy practices back into WTO‑conformity. Together with Argentina, Australia, Canada, Thailand and the United States (with Japan as a third party), New Zealand participated in four formal rounds of consultations with Hungary under the Dispute Settlement Understanding in 1996. These consultations did not resolve the issue and New Zealand, together with Argentina, Australia and the United States sought the establishment of a WTO panel in January of 1997.
A Panel was established in February 1997, however it did not have to convene to hear the dispute, since the parties reached a settlement of the dispute which was notified to the Dispute Settlement Body in July of 1997.