Trade Barriers

Trade barriers can affect countries' competitive advantage on world markets by determining relative profitability of different import and export markets, and thus shape trade flows. Trade barriers include tariffs and quotas, but can also include direct payment support by governments to sheep and lamb producers. One objective of the World Trade Organization (WTO) Doha Development Agenda is to increase access to agricultural markets by reducing barriers to trade such as tariffs, quotas, and other federal

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Fig. 2 U.S. lamb and mutton imports. (From U.S. Department of Agriculture, Economic Research Service, "Cumulative U.S. Meat and Livestock Trade,'' www.ers.usda.gov/Briefing/Poultry/Data/AnnualLivestockTable.xls, accessed November 2003.)

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Fig. 2 U.S. lamb and mutton imports. (From U.S. Department of Agriculture, Economic Research Service, "Cumulative U.S. Meat and Livestock Trade,'' www.ers.usda.gov/Briefing/Poultry/Data/AnnualLivestockTable.xls, accessed November 2003.)

Fig. 3 Exchange rates: U.S./Australia and U.S./New Zealand. (From Pacific Exchange Rate Service, http://fx.sauder.ubc.ca/data.html, accessed November 2003.)

Fig. 3 Exchange rates: U.S./Australia and U.S./New Zealand. (From Pacific Exchange Rate Service, http://fx.sauder.ubc.ca/data.html, accessed November 2003.)

support to producers. The Doha agricultural trade negotiations began in early 2000 and plan for resolution by January 2005.

Support levels to agricultural sectors in the early 2000s dropped for most agricultural commodities in Western countries relative to the late 1980s. However, support for sheep meat increased in 2002. One indicator of relative agricultural support is the Percentage Producer Support Estimate (PSE). PSE is an indicator of the annual monetary value of gross transfers from consumers and taxpayers to agricultural producers. The PSE was 16% for the United States in 2000 and estimated at 15% in 2001.[4] By comparison, the PSE for Australia and New Zealand for sheep meat in 2000 was 4% and 0%, respectively.1-4-1 The PSE in the EU was 53% for sheep meat in 2000 and estimated at 72% in 2001.[4]

Trade barriers to lamb and mutton trade can also be more transparent. Lamb and mutton imports to the United States increased steadily since the mid-1980s, but increased sharply since 1994. On October 7, 1998, the American Sheep Industry Association, Inc. and copeti-tioners filed a petition that increased quantities of low-priced imported lamb from Australia and New Zealand and were a substantial cause of serious injury to the U.S. lamb meat industry. As a result, the U.S. president issued Proclamation 7208 on July 7,1999, which imposed a tariff-rate quota (TRQ) on imports of fresh, chilled, or frozen lamb meat for three years and one day.

Australia and New Zealand submitted complaints to the World Trade Organization (WTO). The United States is Australia's largest market. In May 2001, the WTO Appellate Body ruled that the United States' import restrictions on lamb meat were illegal. The United States complied with the ruling and the TRQ was removed on November 15, 2001.

The effect of the TRQ was mostly offset by weak Australian and New Zealand currencies. Imports increased under the TRQ, even with an over-quota tariff of 40% in 1999 and 32% in 2000, because the U.S. dollar appreciation occurred concurrently.1-5-1

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