[asia-apec 1625] WTO interim ruling on US/NZ/Australia sheep strife

[APEC Monitoring Group]

Australian Financial Review, 26 October 2000



WTO rules against US in lamb row

By Brendan Pearson

The World Trade Organisation has ruled in favour of the Australian and New
Zealand governments in their high-profile dispute with the United States
over restrictions on lamb exports.

The confidential interim finding was delivered to the respective governments
this week ahead of the public release next month of the report of the
three-person adjudicating panel.

The complaint was launched last year after the Clinton Administration
imposed a series of barriers including a 9 per cent tariff on all Australian
lamb exports and a prohibitive 40 per cent tariff on shipments of lamb above
1998 levels of 35.5 million kilograms.

The binding decision by the global trade body should lead to the removal of
these safeguard restrictions before their expiry in late 2002.

The result is a significant victory for Australian trade negotiators bruised
by two recent defeats in WTO cases involving subsidies to Victorian leather
producer Howe & Co and the salmon import ban.

The dispute emerged as a major bilateral irritant, with the Prime Minister,
Mr John Howard, warning US President Mr Bill Clinton last year that any
barriers to Australia's $110 million lamb trade would be regarded as "the
most serious threat to the bilateral trade relationship for several years".

Local farm leaders were also furious, with National Farmers Federation boss
Mr Ian Donges describing it as the "Everest in hypocrisy".

But President Clinton rejected these representations, and instead imposed a
three-year program of safeguard measures to shield the US sheep and lamb
industry from competition while it underwent a program of restructuring.

Nonetheless, Australian lamb sales to the US have continued to grow over the
past year, with product remaining competitive despite the 40 per cent tariff
on sales above 35.5 million kilos.

Once the ruling is made public, the US can appeal against it and may also be
granted up to 15 months to implement the ruling.

But given that the three-year safeguard program is due to expire in late
2002, it is likely the WTO will require prompt implementation of the panel
decision.

If the US fails to comply within specified time frames, Canberra may be
authorised to impose retaliation or seek compensation.