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010853 US Ends Australia, N.Z. Lamb Import Quota

August 31, 2001

Washington - The United States said it will abandon an import quota on lamb meat from Australia and New Zealand, effective Nov. 15, and instead provide its domestic industry with new aid of $42.7 million.

The deal comes just hours before a deadline set by Australia and New Zealand for the United States to lay out its plans for the import quota, which has been deemed illegal by the World Trade Organization.

“We are pleased that by working cooperatively with our lamb producers, members of Congress, and important trade partners, we have resolved this difficult issue,” U.S. Trade Representative Robert Zoellick said in a statement.

“This program will enhance the competitiveness of our lamb industry and is fully consistent with our WTO obligations.”

The two countries, which are leading lamb meat exporters, had threatened to seek WTO sanctions against the United States unless the illegal import quota was scrapped.

The American Sheep Industry Association (ASIA) applauded the new domestic support program.

“Given weak lamb prices in the U.S. this summer and the strong U.S. dollar, the tariff levels are not having much of an impact today,” said ASIA President Frank Moore in a prepared statement.

The added funds, available through fiscal year 2003, will pay for an unspecified amount of U.S. Agriculture Department purchases of lamb meat and payments to producers.

The U.S. trade group said the new program should end a long and bitter trade fight the United States had been locked in with Australia and New Zealand.

The quota was put in place two years ago by then President Bill Clinton and had been scheduled to expire in July 2002. It, along with $100 million in federal funds earmarked in 1999, were intended to give the small U.S. industry time to become more competitive against Australia and New Zealand.

Under the quota, Australia and New Zealand initially faced a 9 percent tariff on lamb exports to the United States of up to 35.3 million kg and a 40 percent tariff on additional exports.

The tariffs were recently reduced to three percent within the quota and 24 percent for additional shipments.

The U.S. decision to scrap the quota comes four months after a World Trade Organization appellate body ruled against the U.S. sheep industry, saying the quota violated international trade rules.

Since then, Australia and New Zealand have lobbied hard for the United States to promptly end the quota. The U.S. industry, however, had been hoping the Bush administration would instead recommend that the whole matter be kicked back to the U.S. International Trade Commission with the goal of making the quota WTO-legal.


But with Australian Prime Minister John Howard scheduled to visit the United States in early September, the two countries have been working to clear away this trade dispute.

Howard and President Bush are expected to discuss a possible free trade agreement, among other issues.

Whether the U.S. aid since 1999 has helped the industry is a matter of debate, however.

One U.S. agriculture industry official, who asked not to be identified, said the domestic sheep industry “remains on a resuscitator,” despite federal funds to help in marketing and promotion, research and the government purchases of the meat.

The source noted industry difficulties with sheep predators, environmental regulations and labor costs.

According to the U.S. Agriculture Department, there are about 7 million sheep and lambs in the United States this year, down from the nearly 11 million in 1992.

By contrast, Australia maintains about 118 million head, while New Zealand has around 46 million, according to USDA.

Besides the $100 million in aid promised in 1999 and the new $42.7-million rescue package, the U.S. government this year has earmarked about $16 million in emergency assistance to the industry in the wake of low wool prices.

The Bush administration is also considering a new “checkoff” program that would allow the industry to tax producers. The funds would be used to promote lamb among U.S. consumers. A USDA source on Thursday said the checkoff program is now being reviewed by budget officials.

And broad farm legislation moving through Congress would create a loan assistance program for wool and mohair.


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