MEDIA RELEASE

8 July 1999

FOR IMMEDIATE RELEASE

Trade Minister Lockwood Smith has denounced the United States' decision to impose restrictions on imports of New Zealand lamb.

US President Bill Clinton today announced that he had approved an across-the-board tariff on all imports of lamb from New Zealand and Australia in response to the US sheep meat industry's application for safeguard action under Section 201 of the US Trade Act of 1974.

"It's bitterly disappointing that the US has chosen this approach," said Dr Smith.

"In applying these trade restrictions, the US has turned its back on a very constructive proposal from Meat New Zealand and its Australian counterpart, and allowed its long standing reputation as a supporter of free and open trade to be sullied by giving in to short-sighted protectionist sentiment.

"This decision will impose costs of approximately $24 million on New Zealand's lamb industry over the next three years. It will also limit New Zealand's legitimate trade expectations by choking off future prospects of growth with the heavy out-of-quota tariff.

"New Zealand's trade with the US is fair, and, according to the US International Trade Commission, has not caused actual injury to the US sheep meat industry. This unwise decision sends unfortunate signals, particularly in the year when the US will host the World Trade Organisation (WTO) Ministerial meeting which is expected to launch the next round of trade negotiations.

"The most frustrating aspect of today's decision is that everyone loses. New Zealand's farmers and exporters will lose, and the decision will do nothing to assist the serious challenges faced by the US sheep meat industry.

"New Zealand will not take today's decision lying down. My officials have been assessing the impact of today's decision on the New Zealand industry. We are actively considering our WTO options, and in consultation with the meat industry and Federated Farmers we will respond according to New Zealand's best interests.

"The US Government's unwise decision means that a WTO action is certain," Dr Smith concluded.

ENDS

Detail of the decision attached.

Details of US Trade Restrictions on New Zealand Lamb

· Safeguard measures to apply for three years from 22 July 1999, with a review at 18 months;
· In-quota tariff of 9% on imports up to 31,851,151 kilograms, equivalent to the 1998 level of exports from New Zealand and Australia, in the first year of the remedy. In quota tariff to reduce to 6% in the second year and 3% in the third year;
· Quota levels would increase by 857,342 kilograms in both the second and third year of the restrictions;
· Out of quota tariff of 40 % in the first year, reducing to 32% in the second year and 24% in the third year;
· The 31,851,151 kilograms tariff rate quota will be allocated between Australia and New Zealand on the basis of their share of 1998 export sendings: 17,175,909 kilograms to Australia, and 14,531,818 kilograms to New Zealand;

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