Lamb wars: Australia says it’s not to blame for struggling US industry

Washington: Ambassador to the US Greg Moriarty told an inquiry it is not Australia’s fault that the American lamb industry is struggling, as the Trump administration considers imposing new tariffs or restrictions on $1.6 billion of sheep meat Australia exports to the US.

Moriarty said drought, reduced wool demand and the US government’s removal of wool subsidies were to blame for the longstanding decline in lamb meat production, not the proliferation of cheaper imports from Australia.

“Imports have filled the supply gap created by this decline in domestic production. They are a consequence of reduced US output, not a substantial cause of it,” he told the US International Trade Commission.

“Any action to restrict lamb meat imports would only increase costs for US consumers, reduce product availability and risk reversing the steady growth in US demand for lamb to the detriment of the US industry.”

Moriarty said Australia’s supply of high-quality lamb actually helped develop the US sheep industry, and contributed to flock productivity through genetics partnerships, technology transfer and pest research.

Meat has been a source of tension in the US-Australia trade relationship, with President Donald Trump imposing tariffs on beef imports before removing them to combat high consumer prices.

The US imports nearly 80 per cent of the lamb consumed by Americans, with shipments from Australia and New Zealand accounting for “nearly all” of that, according to the commission’s staff report.

US Trade Ambassador Jamieson Greer instructed the commission to examine whether those imports posed a serious injury to America’s domestic industry – a precursor to new trade barriers such as tariffs or quotas.

At a hearing on Friday (Washington time), the US sheep industry and graziers pushed back against what they called “audacious” testimony from Australia’s government and industry representatives.

Paul Rosenthal, a trade lawyer at Kelley Drye & Warren representing the American Sheep Industry Association, argued imports had displaced US producers and caused the decline in domestic production, rather than filled a hole.

It was disingenuous to argue otherwise, he said, and “reminiscent of the proverbial story about the boy who killed his parents and threw himself at the mercy of the court because he’s an orphan”.

Rosenthal said exporters were attempting to portray a biblical utopia of the lion laying down with the lamb.

“This idealised vision of prosperity for the lamb industry conjures visions of the peaceable kingdom – a common place where all God’s creatures will live in harmony,” he said. “As we all know, we have not achieved that peace on earth, and certainly not in the domestic sheep industry.”

But Moriarty and Australian industry representatives pointed to multiple periods over the past 30 years in which both imports and domestic production of lamb fell at the same time.

“This demonstrates that domestic production does not improve even where there are fewer imports,” Australia’s ambassador said.

Matthew Nicely, a trade lawyer at Akin Gump, representing Meat & Livestock Australia, noted most American producers surveyed by the commission did not call for more trade barriers. Of the 49 who responded, 31 did not report injury from imports and took no position on relief measures.

Meanwhile, US lamb prices have recently surged to historic highs, while Australian exports to the US have fallen amid drought – a decline projected to continue until the end of 2027, Moriarty told the hearing.

Nicely accused companies in favour of tariffs and quotas of using “legal acrobatics” to justify their case, such as redefining the domestic industry to include lamb growers and feeders.

Today’s inquiry is similar to one conducted in 1999 when the commission found imports were injuring the US domestic industry and then-president Bill Clinton approved tariffs on Australian exports.

Australia challenged the decision at the World Trade Organisation and won, with the then-Bush administration removing the tariffs. At that time, imports only accounted for a fifth of US lamb consumption.

Advocates for tariffs told the commission that Australia and New Zealand were making the same arguments they did in 1999, and the situation had only worsened dramatically since then.

But Moriarty said Australia and the US now had a free trade agreement, enacted in 2005, which should preclude tariffs on lamb.

Americans have historically eschewed sheep meat, but consumption is increasing. The inquiry heard the typical American only eats lamb once a year, and half of all Americans have never eaten lamb.

“There is so much opportunity to improve these figures,” said New Zealand’s ambassador to the US, Chris Seed.

The commission is due to make its determination by November 13 and then, if necessary, holding a hearing on potential remedies. It will report to Trump by January.

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