U.S. may later cut its lamb duty rate

Press, 22 June 1985, Page 2

U.S. may later cut its lamb duty rate

PA Wellington The countervailing duty to be imposed on New Zealand lamb sold to the United States is likely to be cut substantially later this year, says the Minister of Overseas Trade and Marketing, Mr Moore. In a preliminary ruling, the United States Commerce Department said imports of New Zealand lamb were illegally subsidised and would be subject to a bond of about 12 cents a pound to offset the subsidies.

Lamb imports arriving in the United States last year from New Zealand totalled SUSIO.B million ($23.5 million), the department said. The subsidies came mainly from price support programmes. The case was initiated after complaints were received from American lamb producers. The department will decide by September 3 whether to uphold its preliminary determination. Mr Moore said Commerce Department officials would visit New Zealand next month to verify information supplied by Government departments, the Meat Board, and the Meat Export Development Company. The officials’ visit would give the Government, the Meat Board, and others every opportunity to present the strongest possible case

and argument against the level of countervailing duties. Mr Moore said that, by the time a final determination was made, the actual level of New Zealand agricultural support or other measures which had been determined as subsidies would have been reduced or eliminated. The duty being levied was unfortunately predictable as a result of an agreement signed in 1981 between the then National Government and the United States Administration, Mr Moore said. Mr Athol Hutton, managing director of New Zealand’s biggest meat exporting company, Waitaki NZ Refrigerating, Ltd, said the decision was a severe blow in the short term but now was the time to attack the American market. The countervailing duty applied only for 1 shipments as from yesterday arriving in the States, thus only the tail-end of this season’s production would be affected, Mr Hutton Said. “Next season, there will be no S.M.P.s, so that cuts half of that countervailing duty out. There will be a reduction in export incentives which will further reduce it.” Mr Hutton said he could see the duty coming down from 12c a pound to about 8c a pound, or 4 per cent of total value. “That should not put us in an uncompetitive situation.” The United States was an enormous market and because of the enormous reduction in sheep numbers

there, dropping from 45 million at the end of the Second World War to below 10 million now, there must be a great opportunity for New Zealand lamb there, he said. The Meat Board’s chairman, Mr Adam Begg, said the board would work with the United States Commerce Department verification team in an effort to reduce the duty.

The United States Commerce Department said in its preliminary ruling that imports of New Zealand lamb were illegally subsidised, mainly from price support programmes in New Zealand. The case was initiated after complaints from American lamb producers. New Zealand lamb sent to the United States mainland is all frozen, a result of a “gentlemen’s agreement” with American producers. Much of it goes to the restaurant trade.

It is being suggested now, though, that the latest American action frees New Zealand from any obligation to continue to abide by this agreement, and that chilled New Zealand lamb could sell side-by-side with American lamb instead of being relegated to the frozen bin in supermarkets. Trade experts warn, though, that chilled lamb takes careful handling, and that the economics of selling it would be marginal in the highly competitive American market.