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P4 deal will be good for sheep and beef farmers

Media Release

23 September 2008

P4 trade deal will be significant for New Zealand sheep and beef farmers

Meat & Wool New Zealand says the inclusion of the United States in the P4 trade agreement will add to what is already a high quality trade agreement.

Meat & Wool New Zealand Chairman, Mike Petersen, was enthusiastic about the news that the United States had decided to enter into negotiations to join the P4 (Trans-Pacific Strategic Economic Partnership) which already includes New Zealand, Chile, Singapore and Brunei.

"The P4 is a high quality agreement and the inclusion of the United States, which is the biggest economy in the world, has far greater rewards. Meat & Wool New Zealand has made a significant commitment to building a closer trading relationship with the United States. We've had representation in Washington for nearly 50 years and have more recently been an active participant in the NZ US Business Council and the resulting Partnership Forums in 2005 and 2007."

Mr Petersen said there was huge potential to further develop beef and sheepmeat markets in the United States.

The United States is New Zealand's biggest beef export market and while those exports have fallen slightly in recent years, this has been due to opportunities in other markets like North Asia, where United States beef has been excluded because of BSE.

"The United States will become more important to us again as they pursue re-entry opportunities in North Asia and other markets."

Mr Petersen said the United States was also experiencing a drop in its cattle herd because of increasing feed costs and this could create a greater demand for imports. Current economic conditions in the United States have led to consumers trading down to ground beef products and both these factors have led to stronger import prices.

"The United States joining P4 will put New Zealand in a better position to meet any further increases in demand for beef and sheepmeat."

Tariffs on wool and out-of-quota beef are quite high and it would be important for negotiations to secure tariff free access for all products, he said.

Key statistics

* The United States is the number one market for New Zealand beef exports, taking 45% of New Zealand's beef exports. It was worth $685 million in the year ending June 2008.

* The United States imported 170,000 tonnes of New Zealand beef in 2007 under New Zealand's CSTQ. For this quota there is an in-quota tariff of 4.4c/kg. This amounts to around NZ$10million paid in tariffs. The out-of-quota tariff is 26.4%.

* New Zealand also pays tariffs of 0.7-2.8c/kg on sheepmeat exports to the United States. The United States is New Zealand's second most valuable market for lamb behind the European Union. New Zealand exports around 20,000 tonnes of sheepmeat to the United States worth approximately $200 million annually.

* New Zealand exported 3,500 tonnes of wool (clean) to the United States in 2007, worth approximately NZ$13.8 million. The tariff on wool is 18.7c/kg clean. This equates to around NZ$880,000 paid in tariffs.


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