Policy on the Proposed United States-Australia Free Trade Agreement
July 14, 2003
The Honorable Robert Zoellick
U.S. Trade Representative
600 17th Street, N.W.
Washington, D.C. 20508
Dear Ambassador Zoellick:
As the national trade organization representing the U.S. sheep industry, the American Sheep Industry Association (ASI) is finalizing policy on the proposed United States-Australia Free Trade Agreement (FTA).
Lamb is already freely traded between the two countries, and with maintenance of adequate sanitary and phyto-sanitary requirements for live sheep and meat, we do not anticipate issues with the proposed agreement regarding lamb. That said, the open access for imported lamb into the U.S. market has resulted in a flood of product and price underselling that continues today. The United States is the largest market in the world for Australian lamb, and the domestic lamb industry is dealing with a number of substantial changes in competition that have occurred in the last ten years.
Additionally, we have yet to identify any benefits for U.S. sheep producers regarding changes to access or tariff treatment of our products to Australia. Obviously, export of U.S. sheep products to Australia -- the largest producer in the world, yet with a comparatively small consumer base -- is unlikely to yield substantial benefit.
Due to the lack of benefits and the immensity of issues that continue to be addressed in the lamb business due to imports, trade in wool has become the lynchpin issue in determining our policy regarding the proposed agreement with Australia. (Wool trade is referenced as the products in the agricultural trade section of the harmonized code.)
Today, neither quotas nor tariff-rate quotas regarding wool trade between Australia and the United States exist. However, there is in place a tariff that impacts prices paid to U.S. growers for the domestic clip. Albeit small percentage-wise, the tariffs impact the pricing of the U.S. wool clip because buyers typically base the U.S. market bids on cost of similar Australian wool landed on the East Coast. (The Australian wool industry dominates the world wool trade with prices based on the Australian Wool Indicator.) In fact, a reduction in the small tariffs would mean a reduction in prices paid to U.S. wool growers.
The decline in Australian wool trade to the U.S. is a factor of the decimation of the U.S. wool textile business rather than existing U.S. tariffs. The majority of imported wool is in the form of wool apparel and textile goods vs. grease, scoured or carded wool.
We therefore request that the Administration hold the present wool tariffs off the table in the negotiations, thereby allowing our association to avoid opposing the FTA with Australia. We look forward to the Administrationís response regarding maintenance of our wool provisions as soon as possible.
C: Senate Committee on Finance
C: House Committee on Ways and Means