NCPA - National Center for Policy Analysis

U.S. Lamb Raisers Get Protection

July 12, 1999

President Clinton is abandoning his free-trade stance to give assistance to U.S. sheep producers. He will impose stiff import tariffs on lamb from Australia and New Zealand -- which supply almost all U.S. lamb imports.

Agricultural-policy specialists say U.S. producers had long benefited from subsidies for wool. But when those were removed in 1995, they did nothing to increase the efficiency and productivity of their operations. Had they done so, they might have used New Zealand producers as their models.

  • New Zealand's farmers have invested substantial resources in new technology and effective marketing -- making them among the most efficient producers in the world.
  • New Zealand eliminated domestic agricultural subsidies more than a decade ago and embraced free trade.
  • Although the U.S. International Trade Commission did not find that sheep raisers here have suffered "serious injury," it did suggest imposing a 20 percent tariff on lamb imports, declining over four years -- with the Clinton administration appearing to look for a compromise.
  • Then the administration suddenly caved in to the American Sheep Industry Association's demands and announced far higher trade restrictions than the ITC had proposed.

The decision has reportedly outraged farmers in Australia and New Zealand -- and officials there have vowed to take the U.S. to a World Trade Organization dispute settlement panel.

When the WTO meets in a few months in Seattle, one of the chief U.S. objectives will be to reduce agricultural protection in Europe and elsewhere.

Source: Douglas A. Irwin (Dartmouth College), "Lamb Tariffs Fleece U.S. Consumers," Wall Street Journal, July 12, 1999.


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