The Chairman and nine Members of the Committee on Agriculture
traveled more than 23,000 miles to New Zealand and Australia to
review agriculture trade relations with those two countries. United
States agriculture exports, and expansion of those exports, are
on the top of the agenda for the Committee. Opportunities and
challenges for agriculture trade are abundant around the world
and in New Zealand and Australia.
The agriculture trade delegation to New Zealand and Australia
discussed with government officials and the agriculture leaders
issues of mutual interest aimed at expansion of world wide agriculture
trade. The U.S. shares the goals of open and fair trade with both
New Zealand and Australia. These issues included:
World Trade Organization (WTO) agriculture negotiations;
reduction of subsidies, elimination of trade barriers, and expanded
markets for agriculture;
future trade agreements and fast track negotiating authority;
and,
Asia Pacific Economic Cooperation (APEC) policies.
Members of the Committee met with government officials and representatives
of agriculture organizations in New Zealand and Australia to discuss
each of these issues. There was agreement among the participants
of the need to expand opportunities for trade.
Meetings Held with New Zealand and Australian Government Officials/Agriculture
Industry Representatives:
The Honorable Jim Bolger, New Zealand Prime Minister
The Honorable Lockwood Smith, New Zealand Minister of International
Trade and Agriculture
The Honorable Bill Birch, New Zealand Minister of Finance
New Zealand Meat Producers Board
New Zealand Dairy Board
New Zealand Federated Farmers Association
New Zealand Apple and Pear Marketing Board
The Honorable Tim Fischer, Australian Deputy Prime Minister
The Honorable John Anderson, Australian Minister for Primary Industries
and Energy Mr. Paul Hickey, Executive Director, Australian Quarantine
and Inspection Service
Mr. Paul Barrett, Secretary, Australian Department of Primary
Industries
Australian Wheat Board
Australian Dairy Corporation
Australian Dairy Industry Council
American Chamber of Commerce of Australia
Australian Horticultural Corporation
Australian Meat and Livestock Corporation
New South Wales Farmers' Association
Queensland Sugar Corporation
Australian Grains Council
Queensland Department of Primary Industries
Hawaiian Sugar Council
SUMMARY
With the World Trade Organization (WTO) talks on agriculture
scheduled for 1999 and since agriculture constitutes the largest
positive sector in the U.S. balance of trade, Members of the Committee
on Agriculture Trade Delegation to New Zealand and Australia reaffirmed
the importance of reducing trade barriers and encouraging U.S.
agricultural exports in trade talks with officials in those countries.
Officials in New Zealand and Australia recognized and agreed with
the desire to reduce barriers to trade. Members also discussed
the need for transparency in New Zealand and Australian state
trading enterprises; the role of other countries' state trading
enterprises that govern agriculture imports and may distort trade;
and, the importance of biotechnology in increasing the world's
food supply at a lower cost.
In New Zealand, Members stressed the need for access to that market
for U.S. salmon, as well as steps to improve access for U.S. poultry,
pears, tangerines, and avocados. New Zealand officials have taken
steps to review access for U.S. poultry and salmon.
In Australia, Members asked for assurances that U.S. requests
for access to that market for U.S. fruits, nuts, pork, and poultry
will not be subject to undue procedures under the new Australian
risk assessment system. There is agreement among the various U.S.
and Australian government agencies on the conditions under which
U.S. whole, shelled almonds will be allowed into Australia. It
is expected that the value of U.S. almond exports will be $10
million per year. Australia will be assessing the citrus canker
situation in Florida under its routine risk analysis process and
evaluate other quarantine issues simultaneously. While exports
of Florida citrus are not expected immediately, the process will
continue and the value, upon completion of this process, is anticipated
at $20 million per year. The risk analysis process for table grapes
has begun simultaneously with the requested collection of data
by USDA officials. The earliest timetable for entry of table grapes
is the November 1998 shipping season. However, it is more likely
that exports will begin in 1999. The estimated value of table
grapes exports to Australia is $18 million per year.
The following issues were discussed with government and agriculture
industry representatives in both New Zealand and Australia.
1999 WTO Agriculture Negotiations
Members cited the importance of the upcoming 1999 World Trade
Organization (WTO) agriculture negotiations. The 1994 Uruguay
Round Agreement, for the first time in history, put into place
a system to limit the ability of foreign governments to restrict
trade through tariffs, quotas, subsidies, and other domestic policies
and regulations. Market access was improved and tariffs were reduced.
Even more important, standards were set to make sure that sanitary
and phytosanitary restrictions are scientifically based and justified.
The United States and other agriculture exporting nations, including
New Zealand and Australia, must follow up on the Uruguay Round's
success by aggressively pursuing agricultural negotiations beginning
in 1999.
The close working relationship between Congress and Secretary
of Agriculture Glickman and the U.S. Trade Representative (USTR),
Ambassador Barshefsky, on preparation of the U.S. position for
the 1999 WTO negotiations was discussed. Members reiterated the
desire for the Committee on Agriculture and the Administration
to speak with one voice on agriculture trade matters.
The goals for the 1999 WTO negotiations are to improve access
for agriculture products, lower barriers to trade, and reduce
government spending that interferes with free and fair trade.
Members said the 1999 WTO negotiations will not be a forum for
rehashing the decisions reached in the Uruguay Round Agreement.
Worldwide agriculture trade should be liberalized. The Uruguay
Round Agreement was a first step, not an end to agriculture trade
reform.
Members recalled that the United States worked closely with the
Cairns Group, which included New Zealand and Australia, during
the Uruguay Round negotiations and the 1996 Singapore Ministerial.
All agreed that this partnership should continue, especially for
the 1999 WTO negotiations. Since the 1999 WTO negotiations are
an opportunity to eliminate barriers to worldwide agriculture
trade, Members and New Zealand and Australian government officials
reinforced their close working relationships.
Fast Track Negotiating Authority
New Zealand and Australian government officials and representatives
from agriculture industries expressed hope that the U.S. will
fully participate in negotiations in the WTO for further liberalization
of agriculture trade throughout the world. Agriculture figured
prominently in fast track proposals in 1997, in the Administration
and Congress, due both the importance of agriculture trade and
the problems and barriers that have faced U.S. agriculture in
worldwide trade.
Last year farmers and ranchers in the United States exported $60
billion of agriculture products. Agriculture has a positive trade
balance of $26 billion. The reasons for these positive numbers
is due to the productivity of U.S. farmers and ranchers, the high
quality of their products, and the liberalization of agriculture
trade rules achieved through trade agreements.
Members cited their interest in promoting agriculture around the
world believe U.S. farmers and ranchers can do even better than
was done last year. But unless barriers are broken, expansion
of United States agriculture trade, and worldwide agriculture
trade, will be slowed.
Without fast track authority, the United States will not be able
to complete negotiations or fully participate in the 1999 World
Trade Organization discussions. Other countries of the world,
including major competitors of the U.S., will participate and
the rules for agriculture trade could be written without the full
participation of the U.S.
Other countries are moving ahead to secure trade agreements. Chile
has reached trade agreements with Mexico and Canada; MERCOSUR
(Paraguay, Uruguay, Brazil, and Argentina) has trade agreements
with Chile and Bolivia; and the European Union is seeking agreements
with Latin American and Asian countries. Preferential access can,
therefore, be provided to other countries and the United States
can be at a disadvantage unless there is full participation in
trade negotiations.
Discussions with both New Zealand and Australian government officials
and agriculture industries included explanations for the requirement
for fast track. Most other countries do not need "fast track"
authority because they operate under a Parliamentary system of
government. In that form of government a proposal by a Prime Minister
represents the will of the majority party in Parliament.
While there were discussions within the Committee on Agriculture
and Congress on the fast track issues, Members cited their hope
that agriculture issues would figure prominently in future discussions
on this issue in Congress and international trade organizations.
Asia Pacific Economic Cooperation (APEC)
NEW ZEALAND
The specific issues discussed in New Zealand include:
use of state trading enterprises (dairy and horticultural products);
access to the New Zealand market for U.S. salmon, poultry, avocados;
sanitary and phytosanitary barriers to U.S. exports; and
the U.S. export enhancement program (EEP) and the dairy export
incentive program (DEIP).
All trade: U.S. exports to New Zealand $1.7 billion
U.S. imports from New Zealand $1.5 billion
Agriculture trade: U.S. exports to New Zealand $ 96 million
U.S. imports from New Zealand $979 million
Participants in meetings with Members of the Committee on Agriculture:
The Honorable Jim Bolger, New Zealand Prime Minister
The Honorable Lockwood Smith, New Zealand Minister of International Trade and Agriculture
The Honorable Bill Birch, New Zealand Minister of Finance
New Zealand Meat Producers Board
New Zealand Dairy Board
New Zealand Federated Farmers Association
New Zealand Apple and Pear Marketing Board
Dairy
Members had extensive discussions with New Zealand representatives
on issues related to dairy trade in general and specifically related
to the New Zealand Dairy Board (NZDB) a state trading enterprise
(STE). Members cited the position of the United States, as part
of its goal to reduce worldwide export subsidies, to aggressively
pursue the unfair trading practices of state trading enterprises
(STE's) through the World Trade Organization (WTO). Members explained
the importance of reaching the goal to negotiate a new WTO notification
questionnaire so that sufficient information is provided to determine
whether or not STE's are abiding by GATT/WTO rules.
The primary focus of the New Zealand dairy industry is exports.
About 5% of its production is used for the domestic market of
3.5 million people. The New Zealand dairy industry has experienced
tremendous growth in the export market. Production has increased,
in part, due to herd expansion and a switch from beef and sheep
production to dairy.
The New Zealand dairy industry exports more than $2.8 billion
per year. All exports are marketed through the New Zealand Dairy
Board (NZDB), a state trading enterprise. The NZDB's goal is to
expand export markets and to administer a pricing plan that minimizes
the impact of world price volatility on domestic producers.
The NZDB is empowered to purchase, market, and control all dairy
products manufactured in New Zealand for export. Because of this
the NZDB is able to achieve economies of scale in its operations,
which translates into the ability to spread the cost of international
operations across a large volume of sales.
Dairy Export Incentive Program (DEIP)
New Zealand representatives expressed strong opposition to the
use of DEIP in Asia, traditionally a major market for New Zealand.
In the spirit of cooperation, USDA carefully selects countries
for DEIP sales and the U.S. is within the Uruguay Round limits
for export subsidies. The DEIP allocation for nonfat dry milk
for Asia is used up (for the July/June 1997/1998 year) and no
more DEIP bonus will be awarded during that period.
Dairy Export Incentive Program
Commodity/Awards
FY 1990 $9 million for butteroil
FY 1991 $39 million for butter, butteroil, cheddar cheese, nonfat
dry milk, whole milk powder
FY 1992 $76 million for anhydrous milkfat, butter, butteroil,
cheddar cheese, mozzarella cheese, nonfat dry milk, whole milk
powder
FY 1993 $162 million for anhydrous milkfat, butter, butteroil,
cheddar cheese, mozzarella cheese, nonfat dry milk, whole milk
powder, processed American cheese
FY 1994 $118 million for anhydrous milkfat, butter, butteroil,
cheddar cheese, mozzarella cheese, nonfat dry milk, whole milk
powder, processed American cheese, gouda cheese
FY 1995 $140 million for anhydrous milkfat, butter, butteroil,
cheddar cheese, mozzarella cheese, nonfat dry milk, whole milk
powder, processed American cheese
FY 1996 $20 million for cheddar cheese, cream cheese, mozzarella
FY 1997 $121 million for anhydrous milkfat, butter, butteroil,
cheddar cheese, mozzarella cheese, nonfat dry milk, whole milk
powder, processed American cheese
FY 1998 $20 million for anhydrous milkfat, butter, cheddar (to
date) cheese, mozzarella cheese, nonfat dry milk, whole milk powder,
processed American cheese
Source: U.S. Department of Agriculture
U.S. AND New Zealand Opposition to European Union and Canadian
Dairy Subsidies
The U.S. is challenging, in the WTO, the European Union's practice
of excessive subsidized exports of processed cheese. The EU is
circumventing its Uruguay Round commitments and distorting world
prices for cheese.
The U.S. challenged, in the WTO, the subsidy practices related
to Canada's exports of dairy products and its implementation of
its import quotas on milk. WTO consultations have been requested.
New Zealand has also initiated a WTO challenge to the Canadian
subsidies
Canada has adopted a system of special class pooling for milk
that is in reality a producer-funded export subsidy program. This
is a violation of the WTO rules.
Since the creation of Canada's special milk classes, its dairy
trade balance went from a negative $19 million in 1993 to a $68
million surplus in 1996. USDA estimates that Canada's pooling
system is estimated to cost the U.S. dairy industry between $50
million and $100 million per year.
Members cited the need to work together with New Zealand to counter
policies in the EU, Canada, and other countries that impede free
and fair trade.
Fruits/Phytosanitary Issues
Salmon
New Zealand does not allow imports of fresh, chilled, and frozen
salmon from the United States. The U.S. salmon industry believes
this ban is unwarranted and not in accord with existing international
standards.
New Zealand has recently granted Canada, the largest fish competitor
of the U.S., a favorable risk assessment for its salmon. Since
Canadian and U.S. fishermen are fishing out of the same waters,
a favorable risk assessment for Canada should also mean a favorable
risk assessment for U.S. salmon.
Members were advised that the New Zealand risk assessment on U.S.
salmon will be issued in the near future.
Cattle/Beef
New Zealand exported $270 million of beef and beef products to
the U.S. in 1996. Almost all of the beef goes for ground beef
or similar products. The U.S. National Cattlemen's Beef Association
has a good relationship with its counterparts in New Zealand.
They do compete in the same Asian markets; however, the products
are different and appeal to different segments of that market.
Discussions took place concerning country of origin labeling for
domestic and imported meat products, a proposal supported by the
National Cattlemen's Beef Association, and one that is being watched
very closely by New Zealand. They consider this to be a potential
trade barrier.
Kiwifruit
The U.S. currently assesses a 3.5% anti-dumping duty on New Zealand
kiwifruit. This is a result of the Department of Commerce's May
1992, decision that New Zealand was dumping kiwifruit in the U.S.
At that time the duty was set at 98.6%. Since 1992, that duty
has been lowered several times to the current 3.5% level. New
Zealand representatives expressed concern about the duty and their
hope that it would be eliminated in the near future.
The New Zealand Kiwifruit Marketing Board (a state trading enterprise)
controls all exports of kiwifruit, except to Australia. Exports
of kiwifruit have grown by 32% over the past few years and they
are the world's leading exporter. Exports of kiwifruit in 1996
to the U.S. are at about 4,000 tons, which is about 14% of the
1990 level. This is due to the U.S. Department of Commerce's anti-dumping
action and competition from Chile.
Forest Products
The governments of the United States, Australia, New Zealand,
and Canada have proposed that tariffs on paper and wood products
in the APEC countries be eliminated between 2000 and 2004. This
issue is also being pursued in the World Trade Organization (WTO)
to negotiate additional tariff reductions in the "zero-for-zero"
sectors.
The APEC trade ministers met in Vancouver on November 22, 1997
and agreed to pursue accelerated market opening during 1998, with
implementation in 1999. The market opening area include forest
products, fish and fish products, and chemical products.
Members explained that in June 1997, USDA was barred by the courts
from issuing import permits for some unmanufactured wood products,
including logs. USDA may not issue any new permits and cannot
amend any existing permits. Existing permits can be used to continue
importing wood products. USDA is now in the processing of preparing
a supplement to the original environmental impact statement to
comply with the court order. Notification of this was published
in the Federal Register on August 25, 1997. The final comment
period ended on October 24, 1997.
Shipments of logs that arrive at U.S. ports without permits are
being refused entry unless USDA can determine that the wood products
are not subject to permit requirements. USDA is working with interested
parties to identify ways to ease the effects of the court injunction.
The New Zealand Ambassador to the United States has asked the
Administration to give this issue the highest priority for resolution.
Sheep/Lamb
USDA/FSIS recently published an Advanced Notice of Proposed Rulemaking
on requesting comments and data on standards for labeling sheep
and sheep products. Australian and New Zealand officials have
indicated concern over this provision in the past, fearing this
is an attempt to restrict lamb imports from their countries. USDA
officials have indicated that comments will be welcome from these
countries.
Members requested that New Zealand sheep producers provide weekly
price information of their exports to the U.S. , in the same manner
as the U.S. does (the U.S. sheep industry operates under a voluntary
system of reporting). Australian and New Zealand lamb constitute
36% of U.S. consumption.
AUSTRALIA
The specific issues discussed in Australia include:
use of state trading enterprises (wheat and sugar products);
access to the Australian market for U.S. fruits, nuts, pork, salmon, and poultry;
sanitary and phytosanitary barriers to U.S. exports;
the U.S. export enhancement program (EEP) and the diary export incentive program (DEIP); and,
Project 2 - Australia's pilot project for export meat inspection.
All trade: U.S. exports to Australia $12 billion
U.S. imports from Australia $3.9 billion
Agriculture trade: U.S. exports to Australia $398 million
U.S. imports from Australia $894 million
Participants in meetings with Members of the Committee on Agriculture:
The Honorable Tim Fischer, Australian Deputy Prime Minister
The Honorable John Anderson, Australian Minister for Primary Industries and Energy Mr. Paul Hickey, Executive Director, Australian Quarantine and Inspection Service
Mr. Paul Barrett, Secretary, Australian Department of Primary Industries
Australian Wheat Board
Australian Dairy Corporation
Australian Dairy Industry Council
American Chamber of Commerce of Australia
Australian Horticultural Corporation
Australian Meat and Livestock Corporation
New South Wales Farmers' Association
Queensland Sugar Corporation
Australian Grains Council
Queensland Department of Primary Industries
Hawaiian Sugar Council
Wheat
Members met with the Australian Wheat Board and stated their position
regarding state trading enterprises (STE's). The Chairman stated
that the major issue concerning STE's is the lack of transparency.
Much of the information about wheat sales in not known to the
public. STE's can be used to hide sales transaction information---for
example, are sales being made to one country at below cost of
production in order to get control of that market, while higher
priced sales are used to subsidize the Australian wheat producers.
Lack of transparency makes it difficult to determine whether Uruguay
Round commitments (on reduction in export subsidies) are being
kept.
The Australian Wheat Board members responded that they consider
their Wheat Board to be similar to private corporations like Cargill
or Con-Agra, neither of which release specific sales transaction
information. The difference, of course, is that neither Cargill
nor Con-Agra are supported by government legislation granting
them "single desk" buyer or seller status.
The Wheat Board is planning to request legislation that will privatize
the Board's actions in all areas except for export sales. They
will maintain the "single-desk" status as is now in
place.
Should this occur, it does not appear that the test for transparency
will be met by Australia, since the control of export sales and
the information concerning those sales is what is needed to determine
compliance with trade commitments.
Export Enhancement Program
Commodity/Awards
FY 1990 $312 million for barley malt, eggs, feed grains, frozen
poultry, vegetable oil, wheat, wheat flour
FY 1991 $917 million for barley malt, eggs, feed grains, frozen
poultry, rice, vegetable oil, wheat, wheat flour
FY 1992 $968 million for barley malt, canned peaches, eggs, feed
grains, frozen poultry, rice, vegetable oil, wheat, wheat flour
FY 1993 $967 million for barley malt, canned peaches, eggs, feed
grains, frozen poultry, rice, vegetable oil, wheat, wheat flour
FY 1994 $1.1 billion for barley malt, eggs, feed grains, frozen
pork, frozen poultry, rice, vegetable oil, wheat, wheat flour
FY 1995 $339 million for barley malt, barley or malting barley,
eggs, feed grains, frozen pork, frozen poultry, rice, wheat, wheat
flour
FY 1996 $5.1 million for frozen poultry
FY 1997 none
FY 1998 none
(to date)
Source: U.S. Department of Agriculture
Cattle/Beef
Australia exported $282 million of beef and beef products to the
U.S. in 1996. Almost all of the beef goes for ground beef or similar
products. The U.S. National Cattlemen's Beef Association has a
good relationship with its counterparts in Australia. They do
compete in the same Asian markets; however, the products are different
and appeal to different segments of that market.
Discussions took place about country of origin labeling for domestic
and imported meat products, a proposal supported by the National
Cattlemen's Beef Association, is being watched closely by Australia.
They consider this to be a potential trade barrier.
Members of the Delegation visited a beef cattle operation 40 miles
west of the city of Cairns on the Atherton Tablelands. While not
as extensive as cattle stations in the Outback Region, this 300
cow operation clearly illustrated the contrast between grass-fed
cattle production and the feed lot-based system in use in the
U.S. Discussions with the producer included the nature of the
Australian beef production cycle and the workings of its marketing
system.
Dairy
The Australian dairy industry has been expanding its fluid milk
production at the rate of 5% to 6% per year. Its exports of cheese,
butterfat, and non-fat dry milk have more than doubled between
1990 and 1997.
Australia has a Domestic Market Support Scheme in which assessments
on fluid milk are used to finance payments to farmers. Exported
dairy products are exempt from this assessment so as to encourage
such exports. The effect of this Scheme will be the same as the
previous Australian export subsidy program. However, according
to USDA, this Scheme is not considered an export subsidy under
WTO rules.
Australia exports about 70% of its dairy production at an export
level of $1.1 billion. Asia is the primary market.
Australia strongly opposes the use of DEIP. Members advised representatives
of the Australian government and industry officials that USDA
carefully selects countries for DEIP sales and the U.S. is within
the Uruguay Round limits for export subsidies. The use of DEIP
in Asia particularly was mentioned by Australia. Members advised
these officials that the DEIP allocation for nonfat dry milk for
Asia is used up (for the July/June 1997/1998 year) and no more
DEIP bonus will be awarded during that period.
Discussion took place concerning the European Union policies regarding
its dairy exports and the need to work together on this issue.
Dairy Export Incentive Program
Commodity/Awards
FY 1990 $9 million for butteroil
FY 1991 $39 million for butter, butteroil, cheddar cheese, nonfat
dry milk, whole milk powder
FY 1992 $76 million for anhydrous milkfat, butter, butteroil,
cheddar cheese, mozzarella cheese, nonfat dry milk, whole milk
powder
FY 1993 $162 million for anhydrous milkfat, butter, butteroil,
cheddar cheese, mozzarella cheese, nonfat dry milk, whole milk
powder, processed American cheese
FY 1994 $118 million for anhydrous milkfat, butter, butteroil,
cheddar cheese, mozzarella cheese, nonfat dry milk, whole milk
powder, processed American cheese, gouda cheese
FY 1995 $140 million for anhydrous milkfat, butter, butteroil,
cheddar cheese, mozzarella cheese, nonfat dry milk, whole milk
powder, processed American cheese
FY 1996 $20 million for cheddar cheese, cream cheese, mozzarella
FY 1997 $121 million for anhydrous milkfat, butter, butteroil,
cheddar cheese, mozzarella cheese, nonfat dry milk, whole milk
powder, processed American cheese
FY 1998 (to date) $20 million for anhydrous milkfat, butter, cheddar cheese, mozzarella cheese, nonfat dry milk, whole milk
powder, processed American cheese
Source: U.S. Department of Agriculture
Australia/U.S. Partnership in Opposition to EU and Canadian Dairy
Subsidies
Members expressed appreciation for the Australian support of the
U.S. WTO challenge of the European Union's practice of excessive
subsidized exports of processed cheese. The EU is circumventing
its Uruguay Round commitments and distorting world prices for
cheese.
The effect of the EU policy is to undermine the commitments made
by countries in the Uruguay Round. Policies like the one used
by the EU for dairy (processor subsidies) can spread to other
commodities or countries without strong action by the WTO. Unless
this policy is ruled out of order by the WTO, the higher EU dairy
stocks will adversely impact both U.S. and Australian exports.
Australia joined with the U.S. to challenge the subsidy practices
related to Canada's exports of dairy products and its implementation
of its import quotas on milk. WTO consultations have been requested.
Since the creation of Canada's special milk classes, its dairy
trade balance went from a negative $19 million in 1993 to a $68
million surplus in 1996. USDA estimates that Canada's pooling
system is estimated to cost the U.S. dairy industry between $50
million and $100 million per year.
Australian Honey Bee Exports to the U.S.
In response to inquiries from Australians, Members explained that
USDA/APHIS will be publishing a notice of proposed rule making,
soliciting views on the importation of honey bees, any science-based
risk assessments, and the identification of measures to mitigate
any risk associated with imports of honey bees.
USDA/ARS already conducted a risk assessment for the importation
of honey bees from Australia and New Zealand and these findings
are being reviewed. USDA indicates that it is likely that imports
of Australian honey bees can occur safely. Notice must first be
published in the Federal Register.
Australian Oats and Barley Exports to the United States
The United States restricts imports of Australian oats and barley
if those products are contaminated by wheat, since wheat has the
potential to be infested with flag smut.
Australia maintains that the U.S. position is not justified by
science. They say that U.S. wheat is already infested with the
same strains of flag smut as found in Australia. Australia is
gathering additional information to support this contention. USDA/APHIS
has begun a pest risk analysis on flag smut.
Pork
Australia bans U.S. pork because of concerns over the spread of
porcine reproductive and respiratory syndrome (PRRS). However,
PRRS, according to USDA/APHIS, is believed to occur around the
world. (Australia says they do not have PRRS but no documentation
has been presented to APHIS.) Other diseases (pseudorabies, trichinellosis,
and transmissible gastroenteritis) that may be cited by Australia
as reasons for keeping out U.S. pork are List B diseases and are
not considered to have the potential for very serious spread.
Any risks associated with spread of these List B diseases is easily
managed through techniques including feed management, safe food
handling, and other site-specific eradication programs.
USDA/APHIS conducted a PRRS risk assessment in October 1997, in
regard to U.S. pork exports to Argentina, and found that the likelihood
of transmitting PRRS by U.S. pork was negligible. Australia could
accept this risk assessment. The newly established Australian
process, however, dictates a multi-year protocol under which each
commodity will have to be evaluated.
The National Pork Producers Association considers Australia's
action to be a non-tariff trade barrier. This is a potential $12
million to $14 million market. U.S. pork producers want to export
to all pork consuming countries, regardless of market size. They
believe that Australia's action sets a bad precedent and that
developing countries will copy the action by Australia, an outspoken
proponent of free trade.
Proposed Changes to Australia's Export Meat Inspection System
(Project 2)
The Food Safety and Inspection Service (FSIS) has completed its
review and consideration Australia's proposed changes to its export
meat inspection system (known as Project 2). FSIS states that
it supports Australia's intention to implement a hazard analysis
of critical control points (HACCP) based export meat inspection
program that requires plant management to take responsibility
for establishment sanitation and product safety. However, FSIS
informed Australia that the type and intensity of government oversight
provided by the Australian Project 2 plan inadequate to verify,
over time, in normal operating conditions, that industry process
controls will be maintained.
This issue was discussed extensively during meetings with Australian
government officials. Both the Deputy Prime Minister and the Minister
of Primary Industries and Energy expressed strong objections to
the FSIS decision. Based on information provided to the Committee
by FSIS, the Australian proposal incorporates provisions of a
HACCP system, similar to the system adopted by the USDA. The principles
of HACCP are generally recognized as a major advance in modernizing
meat inspection and a key to providing improved food safety for
the public.
Members expressed concern that the actions of FSIS may have serious
repercussions for the planned USDA meat inspection system. They
stressed the importance of basing trade and market access decisions
on sound science. Members wrote to the U.S. Secretary of Agriculture
upon their return to request a review of the decision rendered
by FSIS.
Salmon
Australia bans imports of fresh, chilled, and frozen salmon from
the United States because of the risk of 20 salmonid diseases
that could be transmitted to their fish. USTR joined with Canada
in requesting dispute settlement in the World Trade Organization
(WTO) on this issue. The U.S. salmon industry believes this ban
is unwarranted and not in accord with existing international standards.
USDA evaluated the diseases and found that these diseases are
not transmissible in processed product. The U.S. salmon industry
is concerned that Canada will strike its own deal with Australia.
According to USTR, should this occur, the U.S. would be able to
go to the WTO dispute settlement for a violation of MFN.
Sheep/Lamb
The 1996 farm bill included a provision requiring the Secretary
to issue standards for labeling sheep and sheep products. USDA/FSIS
published an Advanced Notice of Proposed Rulemaking requesting
comments and data. Australian and New Zealand officials have indicated
concern over this provision in the past, fearing this is an attempt
to restrict lamb imports from their countries. USDA officials
have indicated that comments will be welcome from these countries.
Members requested that Australian sheep producers provide weekly
price information of their exports to the U.S. , in the same manner
as the U.S. does (the U.S. sheep industry operates under a voluntary
system of reporting). Australian and New Zealand lamb constitute
36% of U.S. consumption.
Sugar
Members met with representatives of the Australia sugar industry
and visited a sugar farm in Queensland. Members also met with
representatives of the Hawaiian sugar industry.
The U.S. sugar industry believes that STE's must be addressed
in the 1999 WTO negotiations. It is concerned about the trade
distorting practices of the Queensland Sugar Corporation (the
lone buyer and seller of raw sugar). Australia complains about
U.S. sugar policies. Nevertheless, the U.S. meets, and in recent
years exceeds, the Uruguay Round minimum requirements for market
access (the U.S. imports more sugar than we are required to import).
The U.S. sugar industry would like to see elimination of all export
subsidies, direct and indirect, including STE's like the Queensland
Sugar Corporation. Members requested information on the Australian
sugar industry infrastructure program. Queensland Sugar representatives
stated that the full amount allocated for the program, about $25
million, has not been spent, stating that the cost-share requirements
of the program discouraged many farmers from using the assistance.
Representatives of the Queensland Sugar Corporation raised the
issue of the in-quota tariff and the implications of its removal
would have for the U.S. sugar program and Australia.
Sugar production in Hawaii has shrunk from over a million tons
annually to an expected 340,000 tons for 1998. The industry attributes
this, in part, to the effect on the world price of the EU sugar
program, which exports 6 million tons of sugar into the world
market annually, at subsidized prices. The Hawaiian industry also
faces high wages and tough environmental regulations.
In the face of these obstacles, the Hawaiian sugar industry discussed
the possibility of attracting a refinery that could use new technology
to reduce costs. Hawaiian sugar growers are also experimenting
with new crops, such as taro and seed corn, which can be grown
in Hawaii throughout the year. The industry is preparing for the
1999 WTO negotiations on agriculture, with hopes that the EU's
sugar program will be addressed.
Attachments
Committee on Agriculture Press Release, dated December 15, 1997
Letters (2) to the Honorable Lockwood Smith, New Zealand Minister of Agriculture and International Trade, dated December 15, 1997
Letter from Dr. Bill Roberts, Australian Quarantine Inspection Service (AQIS), dated December 19, 1997
Letter from USDA/APHIS to Dr. Bill Roberts, AQIS, dated January 9, 1998
Letter to American Chamber of Commerce in Australia, dated December 17, 1997
Letter to the Honorable Charlene Barshefsky, United States Trade Representative, dated January 13, 1998
Letter to the Honorable Dan Glickman, Secretary of Agriculture,
dated January 27, 1998