Smith bullish on wool to China

By Philippa Stevenson

agricultural editor

Wool marketers are afraid that tangled Chinese bureaucracy will continue to block imports to New Zealand's most valuable wool market - but Trade Minister Lockwood Smith is more hopeful.

Yesterday, Wools of New Zealand Beijing-based marketing manager Al Ross said Chinese mills were desperate to meet orders using New Zealand wool, but could not get the necessary quota to import it.

"I know of mills that have had to switch to synthetics or other wools because they can't buy New Zealand wool," he said.

New Zealand Wool Group policy general manager Roger Buchanan said there was more than enough quota available in the market, which two years ago took 40 per cent of the country's wool exports, but the problem lay in "bureaucratic wrangling."

Last year, New Zealand wool exports to China dropped by 18 per cent.

Mr Buchanan said: "China's officials have unilaterally decided to split the quota between wool for processing and re-export, and that for domestic consumption. Quota for re-exports has been freely available, but that for domestic consumption - which is where the majority of New Zealand interests lie - has ... been unavailable."

In a further complication, quota had become so scarce that when it did emerge it was a valuable trading item. Money could be made out of quota without any wool being imported, Mr Buchanan said.

Dr Smith said the quota-allocation problem contravened a bilateral agreement in which New Zealand supported China's entry into the World Trade Organisation in return for satisfactory quota administration.

"In the 12 months to the end of June, we exported 27,672 tonnes, which is down from 44,555 tonnes in the June 1998 year. The value decreased from $231 million to $130 million; so it's serious," he said.

Dr Smith said he had raised the matter during a visit to Beijing in March, and at the Apec Trade Ministers meeting in June. Prime Minister Jenny Shipley raised it in Beijing in July. Dr Smith discussed the issue with his Chinese counterpart at this month's Apec meeting, and with another minister during the visit by China's President Jiang Zemin.

At the most recent meeting, it was agreed that New Zealand officials would visit Chinese officials in Beijing in October "to sort the thing out," he said.

"It's not that the ministers have failed to fix the thing up, but that the Chinese system is bureaucratic beyond our belief."

Mr Buchanan said Wool Group hoped the officials would be successful, but he remained sceptical. "Speaking from many years of experience of dealing with these types of issues in China - just when you think you have resolved them, a new issue emerges."

Mr Buchanan said US and Australasian demand for crossbred carpet wools had partly offset the decline in exports to China, but if the alternative markets dampened before China came back on stream "the effects will be quite severe."

"Getting China back on an even keel, particularly as we start the new season, is critically important to us. If they are not, it doesn't bode well."