KEY POINTS:
The Government is pulling out all the stops to ensure New Zealand's wool exports are not disrupted by China's decision to halt new import licences, says Trade Minister Phil Goff.
The Chinese move has rocked the $4 billion Southern Hemisphere wool trade - including New Zealand farmers who sell their wool on both sides of the Tasman.
China says its 2007 global quota for wool had been fully allocated. But exporters say the trade has been stopped with China's quotas for 2007 far from filled.
China is New Zealand's top wool market, with trade worth around $170 million for the year ending March 2007.
The suspension - announced by China's Ministry of Finance and Commerce on its website on July 17 - has hit all wool imports but because of the seasonal timing of exports, has particularly hurt New Zealand, Australia, Argentina, Uruguay and South Africa.
"Our industry depends on continued fair access in China, with transparent trade arrangements," Mr Goff said.
He has written to Commerce Minister Bo Xilai, expressing concern and seeking assurances that the wool trade will not be disrupted.
"New Zealand officials have met with relevant Chinese officials in Beijing to register concerns, and they will continue to work with China toward an early resolution of the issue," Mr Goff said.
Officials "will pull out all the stops to get an early resolution".
New Zealand was also talking to other major wool suppliers to China.
Australia - the world's largest wool exporter, supplying around 80 per cent of world exports - this week sent government officials to meet Chinese counterparts in Beijing, after earlier meetings by Trade Minister Warren Truss with Chinese and Australian wool industry representatives in Australia.
The reasons behind the licence suspensions were not clear, said Peter Morgan, secretary of the Federation of Australian Wool Organisations.
"There's plenty of conspiracy theories going around," Mr Morgan said. Some farmers have called for the Chinese quotas to be reviewed, arguing they may be being used by powerful Chinese mills to control prices.
China could still buy some wool despite the licence suspensions, he said.
Mr Goff said since last month, Ministry of Agriculture and Forestry and Foreign Affairs and Trade officials had been trying to identify the extent to which the quota had actually been filled, help ensure continued New Zealand access to the market and seek greater transparency in the wool quota allocation system in future through a regular notification mechanism.
In Australia, fears of a price plunge this week prompted many growers to withdraw their wool from national sales.
New Zealand exporters said after yesterday's wool sale in Christchurch that prices had lifted, on average, by 5 per cent in the wake of a similar-sized drop in value for the NZ dollar.
Wool Exporters Council executive manager Nick Nicholson said the potential for wool prices to take a marked dip because of the uncertainty about the situation with China had been on everyone's mind.
"The sudden and steep decline in the value of the New Zealand dollar this week certainly helped us out in what could have been a disastrous week," he said.
"We are fortunate that we have many other markets and are not nearly as heavily dependent on China as Australia is," he said.
Mr Nicholson said there was still some confusion in the trade as to what the situation really was and which Chinese importing companies still had quota available.
"Until the actual position is clarified wool exporters will remain a bit nervous," he said.
Trade shock
* China has suddenly stopped accepting wool imports from New Zealand, Australia and other countries.
* The unexplained ban could hurt New Zealand farmers, who export about $170 million of wool to China each year.
- NZPA
