New Zealand expected the United States to remove restrictions on New Zealand and Australian lamb imports without delay, Trade Negotiations Minister Jim Sutton said today.

The United States has notified the World Trade Organisation that it would implement the recent WTO ruling which found United States safeguard tariffs on New Zealand lamb imports illegal, but it requested a reasonable period of time to consider its options.

Mr Sutton warned that New Zealand expects the United States, in considering its options, to respect the rules of the WTO.

"The decision was clear and comprehensive. In our view the United States has no other option but to terminate the restrictions on our lamb exports, which have been in place for almost two years now."

The WTO ruled last month that United States safeguard measures on exports of New Zealand and Australian lamb meat were illegal. The United States is permitted to determine how it will bring the measure into conformity with the rules of the WTO, and to have a reasonable period of time to do so. Exactly how long the US will have to implement the ruling will be the subject of negotiations between the United States, New Zealand, and Australia over the next few weeks.

"Failure of the United States to implement the ruling properly and in a timely manner would leave us little option but to consider further action in the WTO to ensure full and proper implementation of the ruling," Mr Sutton said.

Under WTO rules, New Zealand is able to enforce compliance through further dispute settlement proceedings if, in New Zealand's view, the United States fails to meet its obligation of full implementation.

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, and in May 2001 the Appellate Body ruled comprehensively in favour of New Zealand and Australia. The Appellate Body ruling was adopted by the WTO on 16 May.

Under WTO rules, the US was required to notify its intentions regarding implementation of the lamb decision by mid-June. The US has now indicated that it intends to implement the WTO ruling in a manner that respects its WTO obligations, and that it has begun to evaluate options for doing so. The US indicated it would need a reasonable period of time in which to do this. Exactly how long the US will have to implement the ruling will be the subject of negotiations between the US, New Zealand, and Australia over the next few weeks.

The US is permitted, in the first instance, to determine how it will bring the measure into conformity with the rules of the WTO. The primary question for the US is whether to remove the measure, or whether it can modify the measure so that it conforms to the WTO ruling. The US Trade Representative is able, under US law, to refer the latter question to the ITC for advice. The New Zealand Government has not been advised that a decision to do so has been taken.

New Zealand's view is that, in light of the comprehensive nature of the ruling in this case, that the US has no option but to remove the measure. If New Zealand does not consider that the US has properly implemented the decision, New Zealand is able to enforce compliance through further accelerated dispute settlement proceedings.

ENDS.

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