US backs down on lamb

27 Jun, 2001 10:00 PM
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AFTER two years of argument in the World Trade Organisation, the United States has finally promised to abandon its trade restrictions on lamb imports from Australia and New Zealand.

Despite pressure from its domestic industry, and a number of Democrats senators, US government last week informed Australian trade officials that it would comply with a WTO direction to disband its quota and tariff system - ending speculation that it would seek to modify the restrictions to make them WTO compliant.

"It is the intention of the United States to implement the recommendations and rulings of the (WTO) Dispute Settlement Body in this dispute, in a manner which respects United States' WTO obligations, and we have begun to evaluate options for doing so," the US statement said.

As a result the US will is expected to soon shelve its unlawful protection measures, which are currently slugging Australian lamb exports with a 6pc tariff for imports below a 17,601t quota, and a 32pc tariff for out-of-quota lamb.

However, the US also indicated it would need a reasonable period of time to implement the ruling and Australia, New Zealand and the US are now locked in negotiations to construct a timeframe to break-down the safeguard measures.

Given the US imposed the tariffs and quotas almost immediately after then-president Bill Clinton recommended their activation, with only product on the water immune from the tariffs, Australian authorities are pressing for an equally quick retraction.

"We want the restrictions removed as soon as possible," Federal Trade minister Mark Vaile said, agreeing the US was very quick to impose the trade barriers. "It would be good to see them act just as swiftly to remove them," he said.

If the timeframe negotiations are unsuccessful, either of the parties can seek WTO arbitration from June 30.

Equally keen to see a quick resolution to the matter is Meat and Livestock Australia and the Sheepmeat Council of Australia.

MLA Marketing Services general manager Dr Peter Barnard said the only 'reasonable amount of time' was immediate elimination of the lamb quotas.

"The lamb quotas have already been in place for a grossly unreasonable amount of time from the perspective of Australian lamb producers."

Dr Barnard said MLA told the US Administration well before they were introduced that the restrictions were clearly illegal under WTO rules.

"No justification exists for further procrastination. We expect the US Administration to act quickly to remove these illegal measures," he said.

Sheepmeat Council president Bill Whitehead said the announcement gave no assurance to producers that the restrictions would be removed and was made purely as a response to a WTO deadline.

"The most important question, about how they will deliver compliance, remains unanswered. The fact that they are still considering their options is a concern," he said.

Mr Whitehead said it was still our lamb industry that was suffering, saying "the longer this decision is delayed the longer the Australian lamb industry will continue to incur the costs associated with these illegal import restrictions".

"Clearly, the preferred option is for removal of these measures in the shortest period of time possible and the council will continue to vigorously support the federal government's efforts to lobby the US administration to achieve this outcome," Mr Whitehead said.

In the mean time, the US sheep industry is lobbying heavily for a revision of the safeguard measures, rather than their abandonment. Many countries are viewing their success as a test of the US' free trade credentials.

Just what affect the removal of the quota will have on Australian lamb markets remains unclear.

Little impact is expected until the quotas and tariffs are officially removed, but while their abolition will allow a totally open market to resume, and will prevent importers paying a duty on their purchases, some industry analysts believe the orderly marketing forced onto exporters by the quota system had actually increased prices, as Australian exporters weren't undercutting each other to win US export orders.

Either way a speedy resolution should boost the Government's argument that free trade and rules-based trading system can deliver benefits for Australian farmers.

Mr Vaile admitted parts of the WTO needed an overhaul, but claimed without it, exports would suffer and lamb producers would have been forced to endure the restrictions for at least one more year, if not more.

"The structures and disciplines within the WTO need to amended and improved," he said.

"But we have got an outcome. And if we didn't have a structured rules-based system, we probably wouldn't have an outcome."

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