Sheep industry to fight US ruling

By Philippa Stevenson

Transtasman sheep meat industries - unwilling to be scapegoats for under-performing American sheep farmers - will battle a United States trade commission ruling against lamb imports.

Both New Zealand and Australia yesterday reacted with disappointment after the US International Trade Commission announced that transtasman lamb imports were unfairly threatening local producers.

The finding means penalties, including tariffs or quotas, can be placed on New Zealand lamb imports.

The commission will hold a hearing on February 25 to consider the penalties before making recommendations to President Bill Clinton by April 5.

The North Island meat company Affco has the largest share of New Zealand's lamb market in the US, which last year was worth $134 million.

Yesterday, its chairman, Peter Jackson, said the US and Canada were growth markets for New Zealand lamb, particularly the chilled product. The American lamb industry was in decline and the country's Sheep Industry Association, which had brought the case, was looking for a scapegoat, he said.

"I would think New Zealand is enhancing the value of lamb consumption in the US and I would see any implementation of tariff or quota as a negative in the free trade environment which we all talk about, particularly the Americans."

Trade Minister Lockwood Smith, who yesterday expressed disappointment at the commission finding to the deputy assistant US trade representative in Wellington, said the Government would put its full weight behind the meat industry.

"New Zealand meat producers must not be penalised for successfully marketing a quality product to discerning consumers in the US."

Meat New Zealand's trade policy general manager, Gerry Thompson, said there were signs the commission's decision might not affect the present level of imports.

The commission had determined that increased imports of lamb meat were a threat to the US industry but had made no finding on the claim that there was already serious injury, he said.

That suggested American sheep farmers should not expect the commission to drop below the current import level.

Meat NZ's American-based team was still forming a strategy to tackle the finding but "the remedy should address structural difficulties and problems of the domestic industry rather than donging imports."

Mr Thompson said that under World Trade Organisation rules, any action to restrict imports had to have a time limit - usually four years with a possible rollover for another four years.

The US accounts for only 6 per cent of New Zealand lamb exports, but is considered a valuable market because of its returns and its huge potential for market growth. Annual per head consumption was a paltry 450gm last year.

New Zealand and Australia have a one-third share of the market, up from 15 per cent three years ago. They can also sell lamb more cheaply because the Australian and New Zealand dollars have dropped about 6 per cent against the US dollar in the past year.