The United States should move quickly to remove restrictions on New Zealand and Australian lamb imports that the World Trade Organisation has ruled are illegal, Trade Negotiations Minister Jim Sutton said today.

The WTO's appellate body made public at 2am New Zealand time its ruling that United States restrictions on New Zealand's exports of lamb meat are illegal.

Mr Sutton said the ruling was a significant victory for New Zealand and Australia.

"The appellate body's ruling is particularly important for New Zealand's lamb industry as it confirms that US restrictions on our exports are unjustified and must be removed."

A WTO Panel found the US restrictions illegal late last year following a complaint made by the New Zealand and Australian governments. That ruling was appealed by the United States, but has now been confirmed by the WTO's Appellate Body, which is responsible for reviewing panel decisions when they are appealed.

Mr Sutton, who is meeting Bush Administration trade officials in Washington DC right now, said that the United States must now fully comply with the ruling, and New Zealand would seek the removal of the safeguard measure by the US as quickly as possible.

"This victory demonstrates the value of a rules-based trading system to a small trading nation like New Zealand. It's only through insisting that all trading nations follow the same rules that a country as powerful as the United States, itself an advocate of the benefits of free trade and a rules-based system, can be obliged to change its approach."

It is estimated the United States' restrictions have cost the New Zealand lamb industry about NZ$20 million.

Media Background Paper

The United States introduced a safeguard measure on lamb in July 1999, following a determination by the United States International Trade Commission (ITC) that imports of lamb meat from New Zealand and Australia were threatening to cause serious injury to US sheep farmers and the lamb meat industry.

The measure took the form of a tariff rate quota (TRQ) imposing additional tariffs and a quota on lamb meat exported from New Zealand and Australia. The measure was imposed for three years (July 1999 - July 2002), with the possibility of extension for a further five years.

It is estimated that the costs of the US measure to New Zealand's lamb industry so far are approaching NZ$20 million. The value of NZ's lamb exports to the US in 2000 was approximately NZ$188 million.

New Zealand and Australia initiated proceedings under the WTO's dispute settlement provisions in October 1999.

In December 2000 the WTO Panel hearing the dispute ruled in New Zealand's and Australia's favour. The United States appealed the Panel's ruling to the WTO's Appellate Body in January 2001.

In response, New Zealand also appealed certain adverse decisions of the Panel. New Zealand and Australia provided written submissions, and appeared before the WTO's Appellate Body in March to present its arguments. The Appellate Body has now delivered its Report.

A full copy of the Appellate Body report can be found on the WTO's web site (www.wto.org/).

Office of Hon Jim Sutton

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