NZ firms jubilant over win on lamb

By PHILIPPA STEVENSON agricultural editor

Meat companies are upbeat at the prospect of an early end to trade restrictions in a United States lamb market so lucrative it has barely been checked by 15 months of tough sanctions.

Export industry sources were confident yesterday that they could begin increasing the $180 million market immediately if, as expected, a World Trade Organisation (WTO) disputes panel ruling goes against US-imposed tariffs.

Leaked reports of an interim WTO ruling, issued confidentially to the New Zealand, Australian and US Governments but confirmed by a US official, said the panel found that the US had violated some WTO rules when President Bill Clinton imposed the three-year restrictions on lamb imports from the transtasman neighbours last year.

The Government and Meat New Zealand gave a cautious response to the reports, saying the ruling was just one step towards resolving the dispute and was likely to be appealed, taking the issue well into next year.

But meat industry sources, who were unwilling to be named while the matter was still being handled Government to Government, said the US lamb market had remained strong during the period of restrictions and was ripe to resume its steady growth once they were removed.

Tariffs, which in the first year were 9 per cent on a quota of 14,500 tonnes and declined in the following two years, were expected to cost the industry up to $50 million over the three years.

Exporters said that so far the tariff costs had been passed on to American consumers prepared to buy lamb even at the higher prices.

But the industry's loss could be reckoned in the millions of dollars it had missed from further market growth.

The fall of the New Zealand dollar against the US dollar meant the New Zealand industry had maintained its level of earnings.

Australian exporters had even found the market profitable while incurring a 40 per cent tariff on 4000 tonnes of lamb exported above their 17,500-tonne base quota.

Speaking from Turkey, Agriculture and Trade Negotiations Minister Jim Sutton said the trade restrictions had been very disruptive to promotional and marketing plans.

"We're encouraged by the position we're in but we are not taking anything for granted in the process."

The WTO panel had made only an interim report, and any of the parties could have it reviewed and appeal the decision, he said.

"We can expect all those things to happen so we shouldn't be counting our lambs before they're hatched."

Mr Sutton said that the potential in the US was huge because Americans ate only about 500g a year, and the export lamb was of high quality.

New Zealanders eat about 18kg a year.

"We retain a great faith in our product and our ability to further develop the market for the benefit of not only New Zealand farmers but for American producers as well."

Meat NZ chief executive Neil Taylor said appeals could delay any outcome from the WTO report until mid-2001, close to the second anniversary of the tariffs' introduction on July 22.

If the decision was "clean," New Zealand and Australia would be keen to have the restrictions lifted as soon as possible, he said.

The WTO could require the US to compensate affected New Zealand and Australian exporters directly, or possibly by giving an equivalent value in tariff reductions to the exporters in other sectors. But Mr Taylor said the trade rules did not contain any assurance on compensation.

The WTO panel ruling will not be made public until December after all parties have had a chance to file responses to the preliminary findings.

KEYPOINTS


* American consumers paid higher prices for lamb to cover tariffs.

* The market was maintained ...

* ... but growth was restricted.

* The WTO decision will be made public in December.