THE PRESS THURSDAY, AUGUST 14, 1980. More threats to N.Z. exports

Press, 14 August 1980, Page 16

THE PRESS THURSDAY, AUGUST 14, 1980. More threats to N.Z. exports

The threat from lamb producers in’the United States to take action against New Zealand about lamb imports, is no novelty, though the deadline is new. The petition which they have threatened to file with the Government of the United States has been around for six months. The argument is that if New Zealand dbes : not agree to limit its exports of lamb, import restrictions and a duty of 20 per cent to 30 per cent should be introduced. Such measures would go against policies of the American Government hitherto. In 1967 the duty on New Zealand frozen lamb entering the United States was 3.5 cents a pound and it has gradually been reduced and is expected to reach 0.5 cents a pound in the 1980 s. There are no quantitative restrictions on lamb imports to the United States.

' One of the difficulties in assessing the latest move is to decide why the issue has arisen again at this time. A rather different move was initiated at the annual conference of the National Association of Wool Growers at the beginning of this year. It was a much more serious challenge to New Zealand over export incentives.

The latest move has a deadline of next month. The clue may lie in the American election a month later. Possibly the pressures on American politicians have a better chance of succeeding within this period. In any event, the deadline has been set. For its part, New Zealand can only look with some horror at the prospect of limits being introduced on New Zealand lamb to the United States. Canterbury alone sends about 500,000 lambs to the United States each year. American sheep numbers have declined from 40 million in 1940 to about 12.5 •million last year. A slow rise—about 2 per cent—was recorded last . year. Sheep producers in the United States apparently consider that prices are likely to rise and that they .would like - to see imports ’ restricted. New Zealand, through the Meat Export Development Company, which markets New Zealand meat throughout North America through the New Zealand

Lamb Company, has argued 'that promoting the sale of lamb benefits Ameri-. can sheep producers as; well as New Zealand sheep producers. Considerable care has been exercised by the New Zealand company to promote New Zealand lamb with some caution and efforts have been made to avoid antagonising the American producers.

If the issue became one of confrontation, what could American producers do? The petition seems unlikely to succeed by itself. However, another threat is looming. Ear tags for livestock manufactured in Palmerston North qualify for export incentives and are sent to the United States, where they compete with ear tags manufactured in Wyoming. An American case is awaiting a court decision on whether New Zealand’s export incentives amount to a subsidy, which would then cause the United States to impose a countervailing duty. Because the exports of lamb to the United States have added value —as 94 per cent of them do—they qualify for export incentives. If the case went against New Zealand over the ear tags issue, it could well go against New Zealand over the export incentives on lamb exports. The sheep producers’ petition may fail, but there seem to be sound reasons for believing that the United States tends to regard the export incentives as subsidies. The sheep producers may get the sympathy of members of the United State Congress under those circumstances. If the ear tags case comes to a head, the implications will not escape those who have considered that export incentives give New Zealand an unfair advantage in various other markets. Since the rise in exports of manufactures may largely be attributed to the generous export incentives in New Zealand, the problem may prove critical for the export programme. New Zealand is not the only country that offers financial incentives to exporting; but the threat from the United States at the moment is that, a test case will be made of the export incentives scheme. The way in which this issue is handled will need to be delicate indeed.