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Jim Sutton speech - Meat NZ annual general meeting

Jim Sutton speech

Speech to Meat NZ annual general meeting 11am, March 22 Christchurch


Ladies and Gentlemen,

Thank you for the opportunity to speak to you today.

The meat industry is an important one for New Zealand.

According to MAF's updates, this season looks to be a good one for meat producers. There have been higher prices from a combination of improved world prices and a weaker exchange rate. And there has been improved production here because of a more favourable climate than predicted.

However, exporting meat is not always an easy process. As an industry you face significant barriers to your exports. You can't simply send product where you want to.

In some markets your ability to supply is restricted by high tariffs; in others, your competitors have more favourable access conditions; and in still others various supposedly "standards" or "safety-related" concerns impede you unnecessarily.

As Trade Negotiations and Agriculture Minister, I am determined to see you get a better deal.

The World Trade Organisation offers significant opportunities in this regard. Despite the high profile "failure" of last year's Ministerial Conference in Seattle, agricultural negotiations are proceeding.

While that meeting will likely be dominated by procedural matters, it is an important step. It helps demonstrate that, in the aftermath of the Seattle Ministerial Conference, the WTO is able to get on with its business and conduct the negotiations which have been mandated.

Progress in the agriculture negotiations (and the separate negotiations which are being conducted on services) will also be important in building confidence and momentum towards a new Round.

New Zealand's aims for the agriculture negotiations are to significantly improve access to markets and the terms and conditions of that access and to significantly reduce the subsidisation practices of others that impact on world trade.

The meat sector enjoys good access to some markets: that is good and must be maintained. But in other markets, improvements are required.

I cannot promise you any quick fixes. Progress towards these objectives will be difficult. But we and others of a like mind, including the Cairns Group, will be working hard to achieve them. Agricultural trade has for too long been excluded from enjoying the full benefits of the multilateral trading system.

I want to work to rectify that.

One of the biggest problems in your sector during the past year was the placing of tariffs on New Zealand and Australian lamb imports into the United States.

Both we and Australia have taken the United States decision to the World Trade Organisation's disputes tribunal.

In the first step to hearing that complaint, the WTO has formed a three-member panel. Official confirmation of the members has come today.

They are: Ambassador Tommy Koh from Singapore, who will chair the panel; Shishir Priyadarshi from India; and Meinhard Hilf from Germany.

I am pleased the procedural step of forming the panel is now done.

We can get down to the business of challenging the legality of the action taken against our lamb exports by the United States.

Now the hard work begins. We need to convince the panel of our view that the US tariff is contrary to its international obligations. The meat industry will be consulted on a regular basis during preparations for the panel's hearings.

Presentations before the panel are scheduled for late May and early July. Its decision is expected for October. However, a final outcome, including the hearing of any appeals, is likely to be early next year.

American officials have said the US International Trade Commission will conduct a mid-term study based on benchmarks such as market development and production efficiencies to evaluate how the US industry has progressed since the tariffs were introduced.

That report is expected to be presented to the US Congress in January next year.

That study will provide another chance for our Government and your industry to lobby the US authorities for an early end to the tariffs. It will also give us an opportunity to make sure that the US$100 million package given to US sheep farmers a month ago is used properly.

So far, it is too early to tell the impact of that package on our imports.

The tariffs are estimated to have cost our sheep meat producers about $30 million spread over the next three years. But the tariffs also limit our future trade prospects in the US market because of the heavy out of quota tariff rate.

The safeguard action by the US also undermines global moves towards a more
liberalised trading environment. It may encourage other countries to adopt similar protectionist measures.

The tariff regime is an unwarranted and unwelcome constraint on the ability of our companies to build their presence in the US market.

Despite those tariffs, our exporters are doing well in the US lamb market. There has been a modest demand lift. Exporters are also deliberately targeting the high-value end of the market, selling to hotel resorts and restaurants, not supermarkets.

However, the reality is that companies are not doing anywhere near as well in the US market this year as they would have done, had the tariffs not been imposed. I and my Government will be working hard to fix that.

Turning our attention closer to home, let me refer briefly to the subject of producer board reform.

The Producer Board Project Team is all but disbanded.

As its remaining work with kiwifruit and pipfruit tapers off, responsibility for dairy, pork, wool and meat are reverting to MAF.

It is too soon to evaluate the outcome of all that angst, but this much I can say.

Kiwifruit and Apple and Pear have got reform packages largely of their own design.

They are perhaps somewhat awkward and transitional compromise solutions, neither the comfortable monopolies of old nor the red-blooded deregulation sought by the previous government.

But I am optimistic for them.

Dairy is suffering, hopefully temporarily, from an apparent failure of nerve, or vision, or both.

It is our pre-eminent industry.

Today, it faces the choice between boldly taking on for the first time that 95% of the world market that hitherto has not been accessed by international trade

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