Friday, February 23, 2024

Trump would be bad news for NZ lamb

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US lobby backs off from tariffs into key market, but that could change with the election of protectionist president.
NEW YORK, NEW YORK – NOVEMBER 06: Former President Donald Trump speaks to the media as he arrives for his civil fraud trial at New York State Supreme Court on November 06, 2023 in New York City. Trump is scheduled to testify in the civil fraud trial that alleges that he and his two sons Donald Trump Jr. and Eric Trump conspired to inflate his net worth on financial statements provided to banks and insurers to secure loans. New York Attorney General Letitia James has sued seeking $250 million in damages. His sons testified in the trial last week and his daughter Ivanka Trump is scheduled to testify on Wednesday after her lawyers were unable to block her testimony. (Photo by Michael M. Santiago/Getty Images)
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The peak sheep lobby in the United States has backed away from its calls for tariffs to curb lamb imports from New Zealand and Australia. 

However, a former agricultural trade envoy believes the reprieve could be short-lived if former US president and protectionist Donald Trump is re-elected later this year. 

Last April the American Sheep Industry Association (ASI) hired a Washington DC law firm to investigate the impact on US sheep producers from imported competition from their Australian and NZ rivals. 

The investigation was a preliminary step to asking the US government to impose tariffs on imports from the two countries. 

The ASI said “for the past several years” the US industry had not been able to keep up with increased demand for lamb from US consumers with the shortfall being met by imports. 

“The result has been that domestic lamb has lost market share to imports, with the vast majority of gains in consumer demand going to imported lamb meat products,” it said in a statement.

The association said the investigation would determine whether Australian and NZ exporters were dumping lamb on the US market below the cost of production or below the local price. 

Losses to US producers would also need to be proved before an anti-dumping case by the US government could be considered. 

ASI board members were due to review the investigation at their annual meeting in Denver held on January 10-13. 

ASI executive director Peter Orwick said the investigation had found no grounds for further action. 

“The ASI board did not receive any proposals to investigate violation of US trade laws by lamb importers to consider in their meeting.

“That said, it was reported to the board that ASI has a top international law firm on retainer which continually monitors trade and market data to alert us when an investigation is advisable.”

Orwick said the ASI had been involved in three preliminary investigations of importers in the past six years.

Meanwhile a petition for restrictions on lamb imports from NZ and Australia by rival producer group R-CALF is still being considered by the US government. 

R-CALF wrote to US President Joe Biden’s Trade Representative Katherine Tai (USTR) in August asking for the US International Trade Commission to investigate lamb imports from the two countries using section 201 of the Trade Act of 1974. 

This is the legislation Trump used in his first term as president to help wage his trade war against China by imposing tariffs on solar panels with components made by its communist rival. 

In its petition R-CALF called on the USTR to impose tariffs on lamb imports from Australia and NZ to restore the share of the domestic market accounted for by US producers back to 50%.

But despite bi-partisan congressional backing from nine Republican and four Democrat lawmakers in November the petition is still being reviewed by the USTR with no deadline for completion.  

Former agricultural trade envoy Mike Petersen doesn’t believe the danger has passed, however.

“I do not think there is grounds for action at the moment but a President Trump-led government in the US may have a different view and may have a more sympathetic ear to that sort of request.”

Petersen said Trump had shown during his first presidency a willingness to back US farmers where he felt they were being shafted by competitors. 

Billions of dollars in subsidies were paid out to US farmers after China retaliated against Trump’s tariffs with agricultural tariffs of its own.

“We are all looking nervously about whether Trump does win the presidency because it has the potential to cause some grief,” Petersen said.

It wouldn’t be the first time NZ sheep farmers have copped a protectionist backlash in the US market.

President Bill Clinton imposed tariffs on NZ and Australian sheep meat imports in response to demands from US farmers and their congressional allies in 1999.

The tariffs were ruled against after being challenged by Australia and NZ at the World Trade Organisation in 2001 and repealed by the US. 

Such protection would not be available this time around, however. 

The World Trade Organisation’s dispute system is effectively unavailable after Trump and then Biden allowed the system to lapse after refusing to appoint replacement judges. 

Australian producers may have some protection under the dispute provisions of the 2005 US-Australia free trade agreement. 

However, this would not be available to NZ due to the lack of a free trade agreement between the two countries despite many years of trying by NZ.

Tariffs in the US market would be a severe blow for NZ sheep farmers. 

It is a major buyer of high-value cuts such as French racks and has paid premiums for antibiotic-free lamb in recent years. 

Sales reached $511 million in the 2022/23 year, NZ’s second largest sheep meat market by value behind China.

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