U.S. legislation may cut imports of N.Z. casein

Press, 17 March 1987, Page 45

U.S. legislation may cut imports of N.Z. casein

NZPA Washington By TOM BRIDGEMAN

As trade legislation works its way through the United Congress, New Zealand officials are again having to keep a close watch on bills which threaten casein and sheepmeat imports. Each year the United States dairy industry moves to limit imports of casein, a dairy based food product used in imitation cheeses and coffee Whitener, and which is worth millions of dollars in exports for New Zealand. This year is no exception. So far four bills which aim to cut casein imports 50 per cent have been introduced either in the House of Representatives or the Senate.

Whether they will be as unsuccessful as previous years has yet to be determined, but New Zealand officials in Washington are not treating them lightly.

The officials are also watching proposed sheepmeat legislation which is being stirred by the prospect of an export of 20,000 live lambs from New Zealand to Oregon in the year. “New Zealand is always concerned about measures that inhibit access to markets,” said Mr David Kininmonth, the senior trade representative at the New Zealand Embassy.

“We do not consider the proposed initiatives on lamb or casein in any way good for the marketplace.”

The Democrat-con-trolled House and Senate have made trade a priority this year, as lawmakers face domestic pressure from American factories and workers. Stiff competition and unemployment has been caused by foreign imports and declining United States exports. The search for ways to overcome a massive

$U5169.3 billion trade deficit in the last year has led to trade legislation already emerging from the House Ways and Means trade sub-commit-tee in the last week. The full committee plans to deal with the sweeping measure this week.

When the trade measure has passed the House process, possibly by late April, the Senate Finance Committee will then address its legislation.

The final package, if it is to avoid being blocked by President Reagan, willlikely be a mix of Senate and House proposals together with aspects drawn from trade legislation promoted by the Administration.

President Reagan, through his special trade representative Clayton Yeutter, has made it clear the Administration would not be inclined to pass any legislation it saw as protectionist or with a provision, such as that being pushed by the Democrat presidential hopeful, Richard Gephardt. That would require mandatory trade sanctions against countries that have huge trade surpluses with the United States.

Those targets are Japan, West Germany, South Korea and Taiwan.

But the way the House bill is shaping up has so far brought positive noises from Mr Yeutter, who described it as “a substantial improvement” over protectionist legislation which passed the House by an overwhelming majority last year and was reintroduced by the Speaker Jim Wright, this year.

“While we welcome the many favourable changes, this is just the first step in a long process. It should, be no surprise that we still have major problems with some of the provi-

sions,” Mr Yeutter said.

The Administration is working closely with lawmakers to try and meld the bill towards its way of thinking to avoid a presidential veto and that, because of the speed with which the House bill is moving, may cause Mr Yeutter to bow out of the planned International Trade Ministers meeting to be held at Taupo next week.

New Zealand and United States officials are both working on the basis that Mr Yeutter will go to the meeting on March 24 to 26, at which the Minister of Overseas Trade, Mr Moore will be host. But United States caution the final decision on the trip may left to the last moment as they are unsure if Mr Yeutter will be required to stay here to argue the Administration’s trade case with lawmakers on Capitol Hill. The substantive legislation at this stage does not overly concern New Zealand trade officials.

“My feeling is that there is less determination to pass blatantly protectionist legislation than last year,” Mr Kininmonth said.

“Competitiveness rather than protectionism appears to be the main thrust,” he said.

But the danger for New Zealand is that while the four casein bills and the proposed sheepmeat legislation are not part of the major trade bill, they may in the course of the bill’s progress get tagged onto it as part of the deal-making which gets laws passed in the complex United States system.

“There is still a lot of steam in agricultural issues and fairly broad support for doing something about casein,” Mr Kininmonth said.

That was emphasised when a group of farm and trade organisations urged Congress to agree on a

trade bill which would open world markets to United States agricultural exports. The signers of a letter to all United States lawmakers, including the American Farm Bureau, grain growers, cattlemen and pork producers, asked for a law which would provide for vigorous enforcement of United States trading rights around the world, aggressive pursuit of market opportunities in all countries and tough negotiations to remove foreign export subsidies. Opponents of casein imports have argued consistently that it is subsidised by the exporting countries.

New Zealand, which maintains it does not subsidise the product, is the largest single supplier of casein to the United States.

Last year the United States imported 104,361 tonnes of casein and casein mixtures worth SUS2O6 million ($366.68 million). Of that New Zealand sent 48,456 tonnes, 46.4 per cent of the total.

The bills introduced to deal with casein are basically similar, ■ calling for import quotas on casein at half the average of the last five years. The chief sponsors of what will probably be the main bill are Senator Tom Daschle, a Democrat from South Dakota on the Senate Finance Committee, and the Republican representative, Byron Dorgan, from North Dakota, a member of the House Ways and Means Committee. Those committees respectively have jurisdiction over trade laws.

Their bills were introduced earlier this month and are supported by a long list of members from milk-producing states in an effort orchestrated by the National Milk Producers’ Association and lobbyists from its member

co-operatives.

Perhaps significantly for those who do not want the bills to proceed, the chairman of the Senate Agriculture Committee, Patrick Leahy, a Democrat from Vermont, declined to co-sponsor the Senate bill. He has supported similar efforts in the past. Introducing his legislation, Congressman Dorgan argued that imports of casein were one of the major trade problems facing United States dairy farmers.

“Casein is imported into the United States from New Zealand and the European Community countries, chiefly Ireland and France. These caseinexporting countries have developed casein industries in recent years as extensions of their domestic agricultural policies, taking advantage of the United States’s unique position among major countries of imposing no barriers to the importation of casein,” he said. “Due largely to the production subsidies provided in many of the major exporting countries, casein is not commercially produced in the US at the present time,” Congressman Dorgan said. He argued that savings of up to SUS3OO million ($534 million) in dairyprice support-scheme costs could come from limiting casein imports, because United States-pro-duced non-fat dry milk and other milk solids could be used instead of casein, so reducing dairy product purchases by the Government. An aide to Congressman Dorgan said it was still unclear what tack he would be using to push ahead with the bill, although the indications appeared to be that there would be an attempt to have the casein quota provision tacked onto the omnibus trade bill.