New Zealand and Australia have agreed to allow the United States additional time to conclude an agreement with its sheepmeat industry which would result in the industry itself requesting that the safeguard be removed, Trade Negotiations Minister Jim Sutton said today.

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

Mr Sutton said no further action would be taken by New Zealand and Australia against the United States till September 1.

"New Zealand has preserved its legal rights. We can still take this to arbitration if we think that the negotiation with the US industry is running out of steam. But we believe there are good prospects that it will not come to that."

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