US poised to curtail imports of NZ lamb

By Philippa Stevenson

New Zealand has just 66 days to defend its lucrative $100 million sheep meat trade with the United States.

The heat went on at the weekend, when the six-member US International Trade Commission recommended, in a split decision, that President Bill Clinton impose tariffs on imports of New Zealand and Australian lamb.

Both Trade Minister Lockwood Smith and Meat New Zealand - which led the argument during the six-month-long market "safeguard action" brought by American sheep farmers - say the matter is now in the politicians' court.

Meat NZ's general manager of trade policy, Gerry Thompson, says board and Government officials will meet in Wellington today to plan a campaign to lobby the US Administration and combat the counterattack expected from American sheep farmers.

Dr Smith says New Zealand will object strongly to the extraordinary prospect of the US restricting trade or cutting the competitiveness of New Zealand producers.

"We believe New Zealand has a strong case, and the majority recommendation implicitly recognises our argument that the US [sheep] industry's decline is caused by the absence of a sound market development strategy, rather than excess supply."

Three of the six commissioners recommended imposing a tariff over four years on imports exceeding 35,400 tonnes in the first year - effectively the 1998 import level - and in the following three years on imports of more than 37,000 tonnes.

Board chairman John Acland says the commissioners recognised the "problems of the US industry are domestic problems arising from their present uncompetitiveness.

"But they failed to act on the implications of the other key problem: the urgent need to develop growth in demand."

Mr Acland says if Mr Clinton adopts the tariffs it will only discourage the development of the increased market demand for lamb that imported product has been fostering.

Mr Thompson says that in New Zealand's favour, the American Sheep Association had been advised, in a report it commissioned, to work with importers. But it had hidden the July 1998 study by consultants PricewaterhouseCoopers and its dramatic disclosure in the second commission hearing had been greeted with dismay by the chairman.

The report was a significant factor in the recommendations, Mr Thompson says.

"We may never know how much impact it made, but three of the commissioners favoured recommendations at the lighter end of the spectrum."

The three commissioners referred to the study in their comments and suggested the administration look closely at its advice.

US sheep farmers, who had invested heavily in the case, are also likely to mount further attacks, Mr Thompson says.

The US accounts for only 6 per cent of New Zealand's $1.3 billion in lamb exports, but it is considered a valuable market because of its returns and huge potential for growth. Americans eat only 500g of lamb each a year.

Mr Clinton will be officially advised of the commission's recommendations next Monday and has 60 days to respond.