Australia presses U.S. to act on lamb dispute

Zoellick gave assurances to his Australian counterpart in June

By staff and wire reports

CANBERRA, Australia -- Australia said on Monday it may seek arbitration by the World Trade Organization to force the United States to abandon an import quota on lamb meat.

Australian Trade Minister Mark Vaile said that if Washington does not comply in the next few days, Australia would have to consider its options, including arbitration.

In May the WTO upheld an earlier ruling that a U.S. import quota against Australian and New Zealand lamb meat violated international trade rules.

Australia and New Zealand are among the world's major lamb exporters.

The quota was imposed by the Clinton administration and was intended to give the small U.S. industry time to become more competitive.

Assurances from Zoellick

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Vaile said U.S. Trade Representative Robert Zoellick two weeks ago had assured him a decision would be made by the end of July on whether to abandon the quota, according to a Reuters report.

Vaile said that while he had given Washington nearly a month to comply with the WTO ruling and was still hopeful the long-running trade dispute could be resolved, Australian industry was getting impatient.

"(Industry) is happy to go along with the government's position, to a point. And I think that come the end of the month, that's this week -- we'll need to start moving along," he told reporters.

His comments come as US. Secretary of State Colin Powell and Defense Secretary Donald Rumsfeld are in the Australian capital to discuss bilateral relations, including defense ties.

"Certainly (arbitration) is the other avenue of pursuit open to us (but) I believe that through the current process we will achieve a satisfactory outcome," Vaile said.

Vaile took part in a working lunch with the U.S. visitors.

At a press conference later Monday, Australian Foreign Minister Alexander Downer said the government hoped the lamb issue would be resolved "in the next couple of weeks" and hoped that the U.S. response would be satisfactory.

Powell said the U.S. would also give "serious consideration" to a proposed free trade agreement with Australia.

Extra tariffs under U.S. quota system

Under the U.S. quota system, Australia and New Zealand have faced a nine percent tariff on lamb exports of up to 35.3 million kg and a 40 percent tariff on additional exports. The quotas are scheduled to be reduced in the final year of the regime.

Vaile said he understood U.S. trade officials would meet with industry representatives in Washington on Tuesday to discuss how the WTO ruling could best be met, adding that he was not aware of any attempts to skirt the ruling by changing the tariff scheme.

"Our interest is in having the tariff and the quota removed as soon as possible. That's what we continue to argue for," Vaile said.

The U.S. Trade Representative's office said in June it intended "to implement WTO recommendations in a manner which respects U.S.-WTO obligations."

The U.S. is allowed a "reasonable" time to implement the ruling. On June 15 Vaile called on the U.S.to act promptly and avoid a protracted process.

He said Australian lamb meat exporters had lived with "these illegal restrictions" for almost two years.

Reuters contributed to this report.