Lamb and beef quotas in danger

By LIAM DANN, primary industries editor

New Zealand meat exporters are in danger of losing valuable markets because the European Union has failed to boost quotas to compensate for its enlargement in May.

About 1000 tonnes of top-grade beef and 1000 tonnes of lamb - traditionally sold to Cyprus and Malta each year - are at risk now those countries have joined the EU.

The beef sales alone were worth $10 million to $15 million, said Meat and Wool New Zealand trade policy manager Scott Gallacher.


Before the expansion of the EU - from 15 countries to 25 - officials there had promised trading partners that quotas and tariffs would be adjusted to compensate for markets lost as a result.

If countries suffered under the new system, a level of compensation would be agreed, either as additional quota or as quota for another product, French officials told the Business Herald in March.

If a bilateral agreement could not be reached, the World Trade Organisation could be called on to make a ruling.

That was the theory, Gallacher said. In practice it was more difficult.

"It's the red tape and it's the fact that they haven't actually sat down and started negotiating with us yet."

Sheep meat quotas are set on January 1 and the high-grade beef quota on July 1.

Exporters would have to live with the situation this year. But the struggle was to try to get it resolved by July next year.

The threat is most serious for beef exporters as our EU quota for top grade beef is just 300 tonnes. That leaves suppliers to Cyprus and Malta with no chance of staying in the markets they have established.

"If you're not there then people change suppliers and people go with whoever can supply the product."

Lamb exporters would not be hit as hard because 1000 tonnes was just a small proportion of the total EU quota of 226,700 tonnes.

By juggling quota, exporters could probably continue to supply Malta and Cyprus.

"Obviously we'd still like an extra 1000 but there's a bit more flexibility," Gallacher said.

New Zealand was invited to engage in negotiations about expanding the quotas in January, but that process has now stalled despite efforts by the Government and industry to promote our case.

Trade Minister Jim Sutton's office said the Government was aware of the issue and was in direct communication with the EU about it, "as were many other countries".

The EU is required by the WTO to ensure countries such as New Zealand face no new trade barriers because of the enlargement.

The EU is also at a critical point in bilateral negotiations with the South American trading bloc Mercosur - of concern to Meat and Wool New Zealand because a significant increase in South American quotas in Europe could erode opportunities for us to do the same.

Thankfully, the latest round of talks between Mercosur and the EU broke down for the second time on Friday. They will try again next month but now look like they will struggle to reach any agreement by the target date in October.