VISIT TO NEW ZEALAND OF USDA SECRETARY JOHANNS

UNCLAS SECTION 01 OF 02 WELLINGTON 000667

SIPDIS

STATE FOR EAP/ANP/RICCI AND EB/TPP/BTA/ANA
USDA FOR FAS/OA/TERPSTRA, FAS/ITP/SHEIKH, MIRELES, AND
ZIMMERMAN, FAS/FAA/YOUNG AND SEBRANEK,
APHIS/PPQ/ENRIGHT,
ACKERMAN, AND MCGOWAN, APHIS/IS/MITCHELL
STATE PASS TO USTR FOR BWEISEL AND LCOEN

CANBERRA FOR AGRICULTURAL COUNSELOR

E.O. 12958: N/A
TAGS: ETRD TBIO EAGR ECON NZ
SUBJECT: VISIT TO NEW ZEALAND OF USDA SECRETARY JOHANNS
REF: USDA FAS 6673310


1. Summary: During his visit to New Zealand, Secretary
of Agriculture Johanns emphasized the U.S. commitment
to an ambitious outcome to the WTO, including the
reduction of global trade distortions in agriculture.
The Secretary told Prime Minister Clark, Agriculture
Minister Sutton, and others that the U.S. - New Zealand
agricultural trade relationship is strong and that the
two countries work closely and effectively to achieve
export trade opportunities for their farm communities.
In response to the New Zealand press for free-trade
negotiations with the United States, Johanns said that
while there were no current plans for such talks, they
had not been ruled out. End Summary


2. The Secretary was accompanied on his August 21 to
23 visit by J.B. Penn, Under Secretary for Farm and
Foreign Agricultural Services; Ellen Terpstra,
Administrator of USDA's Foreign Agricultural Service;
and, several other USDA officials. The Secretary was
hosted by Prime Minister Clark at a working lunch
attended by Sutton, who also is Minister for Trade
Negotiations; Minister for Food Safety Annette King; and,
representatives of New Zealand's leading farm and
agribusiness sectors. In addition, the Secretary met
with David Carter, the opposition National Party's
spokesman on agricultural issues. Accompanied by
Minister Sutton, Secretary Johanns also visited livestock
farming operations near Hamilton in the country's Waikato
region and an experimental dairy farm operated by Dexcel,
the grower-owned research arm of the New Zealand dairy
industry. He attended a reception hosted by the Embassy
and the American Chamber of Commerce in New Zealand.


3. WTO Trade Negotiations. In bilateral meetings with
Sutton and Carter and at the lunch with Prime Minister
Clark, Secretary Johanns reiterated the U.S. commitment
to reducing global trade distortions for agriculture
through the World Trade Organization (WTO). Secretary
Johanns pointed to President Bush's challenge posed at
the G-8 Summit in Gleneagles, calling for the
elimination of all agricultural trade-distorting domestic
support. The disparity between trade-distorting amber
box ceilings for the EU ($80 billion) and Japan ($32
billion) and only $19.1 billion for the United States was
noted by the Secretary during discussions. The Secretary
made clear that the United States would not unilaterally
cut domestic support, and that our cuts would depend on
comparable gains in market access. Congress would not
otherwise approve domestic support reductions.


4. The USDA delegation noted a successful conclusion
of the Doha Round would help to shape the next U.S. Farm
Bill early next year. The Secretary described as
regrettable the lack of EU progress on market access
and other EU agricultural trade barriers. Secretary
Johanns repeatedly pointed to the need for a good outcome
at the December Ministerial meeting in Hong Kong, noting
the existing farm bill could be "repackaged" and extended
until 2012 if the Doha Round fails.


5. Minister Sutton stressed that New Zealand shares
the same market access objectives in the negotiations.
He agreed that the EU, as well as Japan, needed to make
"significant movement" on market access, but added "we
won't get everything." Sutton said that Japan and the
EU would have to compensate for items they deem
"sensitive" by offering something of value in return.
Sutton added that developing countries, particularly
Brazil, China, and India, needed to agree on a meaningful
formula for reducing their tariffs on industrial
products. He identified these areas, together with U.S.
reductions in domestic agricultural support, as the key
ingredients needed to achieve success in the WTO. Sutton
said the larger players need to show leadership in the
negotiations, noting he does not view the EU's actions
on CAP and export subsidies as "minimalist."


6. Minister Sutton agreed with Secretary Johanns'
assessment that a basic framework needed to be in place
by the time of the December Ministerial. Leaving too
much undone would not bode well for a successful
outcome. Sutton raised the possibility of a mini-
ministerial meeting before Hong Kong. Secretary Johanns
indicated that the United States is willing to
participate in any meeting that could move the process
forward.


7. Secretary Johanns commented that the QUINT meeting
in Australia was useful, but that no significant WTO
progress was achieved. Minister Sutton referred to
troublesome trade issues between New Zealand and
Australia, including Australian industry opposition to
imports of New Zealand potatoes to supply McDonald's,
an expectation that New Zealand would seek WTO dispute
resolution regarding Australia's import ban on New
Zealand apples based on fire blight, and mandatory
country of origin labeling that New Zealand views as
protectionist.


8. Free Trade Agreement (FTA). Prime Minister Clark
and other New Zealand government officials as well as
industry representatives reiterated their interest in a
free trade agreement with the United States. Secretary
Johanns told them that there were "no current plans but
the door is not closed" to FTA talks. He explained to
the officials and the media that the United States
assesses every FTA opportunity independently, based upon
timeframe, resource demands, and economic considerations.
The Secretary suggested taking a look at the history of
the Central American Free Trade Agreement (CAFTA).
Partisan politics led to its narrow passage despite the
obvious trade advantages to the United States. Another
factor to consider is the scheduled expiration of the
Administration's Trade Promotion Authority (TPA) in July

2007. He added that for now, our trade policy energies
have shifted to the WTO.


9. At a working lunch for the Secretary, Prime
Minister Clark and Government of New Zealand and industry
representatives noted the importance of the United
States as New Zealand's most important single country
market for its agricultural exports. Murray Sherwin,
Director General of the Ministry of Agriculture and
Forestry, said that his Ministry is "happy with its
constructive engagement" with USDA. U.S. - New Zealand
cooperation on the apples/fire blight issue was
mentioned. Jeff Grant, Chairman of Meat and Wool New
Zealand, raised the possibility of working together on
Japan's duty snapback on meat imports and industry
cooperation under the Tri Nations Lamb Group.


10. Minister King raised her government's request for
a waiver to new BSE mitigation measures for New Zealand
beef products entering the United States, based upon
New Zealand's BSE-free status. New Zealand's Food Safety
Authority recently completed an assessment of the
United State's BSE regime and determined its safeguards
to be equivalent to those provided by New Zealand's BSE
measures. New Zealand's dairy industry officials
emphasized the importance of the U.S. market and
pointed to joint marketing arrangements that Fonterra has
with Dairy Farmers of America to export U.S. non-fat dry
milk powder and to produce milk protein concentrate in
the United States. They expressed concern about possible
U.S. restrictions on milk protein concentrate imports.
New Zealand's kiwifruit industry representative said
they would like current duty free access to the United
Stated bound by an FTA.


11. Media Reaction. Newspaper coverage of the
Secretary's visit was very favorable. The deputy

SIPDIS
editor of New Zealand's largest circulation daily, the
New Zealand Herald, interviewed Secretary Johanns, who
also participated in a taped interview run on a
nationally televised news program and in a question-and-
answer session with Minister Sutton. The visit was
depicted in the press as offering Secretary Johanns an
opportunity to become better acquainted with New
Zealand's agriculture. The Secretary's assessment that
New Zealand's farmers were flourishing in a non-
subsidized, market-oriented environment was reported
widely. Secretary Johanns emphasized that the United
States enjoys a close relationship with New Zealand and
looks forward to working with whatever New Zealand
Government emerges from the September election to achieve
our common agricultural trade objectives.
BURNETT