America targets NZ barriers

By GREG ANSLEY in Canberra

The mountain facing a free trade deal between New Zealand and the United States has become even more apparent with the release of Washington's latest hitlist of barriers to American exports.

While all but immovable on American controls on agricultural imports, and with the blows delivered by new steel tariffs and the latest Farm Bill, US Trade Representative Bob Zoellick has targeted a broad range of New Zealand policies and restrictions.

His latest National Trade Estimate Report on Foreign Trade Barriers attacks quarantine-based bans on US food imports as unscientific, grumbles about telecommunications, pharmaceutical and foreign investment laws, and raises eyebrows at the creation of Fonterra.

Similar complaints have been levelled against Australia - also trying to negotiate a free trade deal - with concern at bans on imports of US fruit and meat.

Both countries have also been targeted by the American liquor industry, which dislikes tariffs and duties on spirits, which it says reduces its competitiveness.

The inclusion of phytosanitary controls (aimed at preventing the importation of plant diseases) in the list is significant because of America's growing anger at the use of non-tariff barriers to circumvent World Trade Organisation rules - an issue that will be hard fought in the new WTO round.

The US also has a long list of imports banned or restricted because of phytosanitary concerns, and disputes simmer even between New Zealand and Australia, who appear likely to face each other in the WTO because of Australia's ban on Kiwi apples.

Zoellick's report underlines the political problems New Zealand will face in its bid for a free trade agreement. US producers are fighting to continue protection in such areas as beef and dairy, while demanding significant policy, tariff and quarantine concessions from Wellington.

The report, published annually and covering 55 major US trading partners, places New Zealand as America's 41st largest export market, and notes that an 8.3 per cent surge in American exports narrowed Washington's 2001 trade deficit by US$44 million ($99.7 million), to US$65 million.

New Zealand exports to the US rose 5.8 per cent to US$2.2 billion, and US sales to New Zealand climbed 8.3 per cent to US$2.1 billion.

The stock of US foreign investment in New Zealand, concentrated mainly in finance, manufacturing and wholesale, slipped by 1.7 per cent last year to US$5.3 billion.

Zoellick's report expresses concern at New Zealand's biotechnology policies and the moratorium on the commercial release of genetically modified products, which it says departs from Wellington's policy of regulation based on science.

Washington believes the policy may conflict with WTO principles and proposes a case-by-case review of the agronomic, health and environment effects of importing GM products. It will also watch implementation of GM food-labelling laws.

The US is even more concerned at strict phytosanitary controls on imports of American pork and poultry meat, and last November's suspension of imports of Californian table grapes because of infestations of black widow and other spiders.

Zoellick's report says the restrictions do not appear to be scientifically based.

Other concerns include New Zealand's policies on parallel importing and intellectual property rights, local content quotas for radio and television, telecommunications laws, the emergence of Fonterra and New Zealand's failure to ratify the World Intellectual Property Organisation Treaty.

Washington also notes US corporate concerns that Overseas Investment Commission rules could be used against American investment and the potential for their applications to be subjected to political intervention. And the report says the US is concerned at the three-year extension of the import ban on trout.