US embassy cable - 05WELLINGTON667

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