US given more time to obey WTO demand

By GREG ANSLEY and PHILIPPA STEVENSON

New Zealand and Australia have called extra time in their bid to have the United States dismantle the tariffs and quota on lamb imports that the World Trade Organisation has declared illegal.

Trade Negotiations Minister Jim Sutton said yesterday that the Tasman neighbours would take no further action against the US until September 1.

The countries had faced an August 14 deadline to seek arbitration on the issue and the decision was reached after last-minute negotiations.

The issue has been a thorny one. The Bush Administration is under pressure from the powerful US farm lobby to stall on the lamb issue and back away from its wider support for reforms in world agricultural trade.

Australia's conservative Government is under equally strong pressure to resolve the dispute from a rural sector whose support will be sorely needed in election year.

But it also recognises that a WTO brawl would provide ammunition for US opponents of a free-trade deal with Australia, and a confrontation could further delay an end to the barriers imposed by the Clinton Administration in 1999.

Mr Sutton said the postponement would allow the US time to conclude an agreement with its sheepmeat industry, which could result in the industry itself requesting that the tariffs be removed.

"Such a result would be the best possible outcome."

New Zealand could still go to arbitration.

"But we believe there are good prospects that it will not come to that."

Trade advocate Meat New Zealand welcomed the decision.

"We still believe negotiation is the best way to resolve the problem and even though they have not reached an agreement within the 90 days stipulated in the WTO ruling, there is a belief that it is still possible," said chairman Jeff Grant.

"We understand the US sheepmeat industry seems to be responding to the US Administration which clearly sees a need to remove the tariffs, in line with the WTO ruling, and that is very positive."

The alternative, of the US Government's lifting the ban without industry consent, could result in lengthy proceedings involving the US International Trade Commission.

These could drag on for another year.

Mr Grant said Meat New Zealand urged the US Administration to bring the matter to a conclusion at the earliest possible date "as every week that goes by is another $100,000 wrongly taken from the pockets of New Zealand farmers and exporters".

Although the WTO ruled against the US in May, Washington has refused to set a date to comply with the order to remove the tariffs.

The barriers are due to be lifted in July next year.

Farmers claim that the US is stalling to keep them in place as long as possible.