Apple dispute end in sight

The Dominion Post

The end of one of the world's longest trade disputes is in sight. The resolution of Australia's 88-year ban on New Zealand apples now depends on a World Trade Organisation disputes panel. Jon Morgan lays out the arguments and traverses the history.

In the end, it will come down to the science. Are New Zealand's apples washed, polished, wrapped and packed in cartons carriers of disease?

The answer is no, say the scientists. In New Zealand's 120 years of exporting billions of apples, not one case has come to light.

The scientists experts in apple disease gave crucial evidence to a World Trade Organisation disputes panel in Geneva. New Zealand was asking for a ruling to end Australia's 88-year ban on apple imports. Australia was arguing for the imposition of tough import restrictions.

"It's hard to see the result being anything but in favour of New Zealand," Pipfruit New Zealand chief executive Peter Beaven says.

He sat through the latest presentation of arguments and is now awaiting the panel decision, expected in November. "It's hard to be objective. You're sitting there wanting to hear evidence that supports your case. But if you were objective, it would be difficult to conclude anything other than the Australians have exaggerated the risk."

Naturally, the Australians have a different view. Victoria apple and pear grower John Corboy was also in Geneva.

"I don't believe New Zealand proved its case," he says. "But I have to admit my objectivity, like the New Zealanders', has to be in question."

The WTO hearing stems from Australian moves to lift the ban, finalised in 2007. The way was open, but New Zealand growers had to follow a series of steps that would double the cost of production.

They were so restrictive, the industry said, that they were in effect an illegal trade barrier. The Government agreed, and decided that its only option was to appeal to the WTO.

At the heart of the matter are two diseases the Australians don't want fireblight and European canker and a pest, the apple leaf curling midge.

They have proposed a series of inspections and a chlorine wash for fireblight, more inspections for canker and the midge, and laboratory testing of suspected canker.

Growers would have to foot the cost of each of these steps, which would be undertaken by independent contractors. "They're tough," Mr Beaven says. "One canker or one withered flower and you're out."

He is convinced that the aim of the regulations is not to intercept disease but to protect the Australian industry. "It's a farce, a rort."

But they didn't fool the expert scientists called before the disputes panel. By Mr Beaven's reckoning, the scientists gave Australia a hammering, although Mr Corboy doesn't see it that way.

The scientists gave oral evidence and answered the panel's questions. The WTO has yet to make available a transcript, and the New Zealand and Australian notes of what occurred vary.

Here are their views of what the experts said.

Fireblight: Mr Beaven: "According to one scientist, there's as much chance of fireblight bacteria being blown across the Tasman on the legs of insects as there is of it coming in on apples." Mr Corboy: "Others disagree with that. There's no argument among scientists that fireblight can be on mature apples. New Zealand says it won't establish and spread, but that's really stretching the bow."

European canker: Mr Beaven: "One scientist said that for years before quarantine systems were introduced, budwood had come into Australia from the United States and Europe that must have had canker in it. He told us, `I've been racking my brains as to why it didn't establish in Australia, and the only answer can be that it just hasn't got a conducive climate'." Mr Corboy: "That's a porky. Any budwood that has come in for at least the last 50 years has been quarantined for a minimum of three years, and tested as well."

Leaf curling midge: Mr Beaven: "The sole expert said the chances of the midge establishing were incredibly low. His calculation was that for any chance of two adult midges finding each other and mating, 4000 apples would have to come out of storage at the same time and be brought up to ambient temperature together. And then the midges would have to be near young apple trees with young leaves on which to lay their eggs. If we send the apples in retail-ready packaging, the chances of all this happening at the right time are nil."

Mr Corboy: "The midge is a risk. It is clear more research is needed."

When the scientist was asked whether New Zealand's import risk proposal [a smaller inspection sample] was worth following, he gave an unqualified no. "The risk is higher than New Zealand says."

Mr Beaven says the four-person panel showed no signs of favouring either side.

"They asked more questions of the Australians than they did us, if that's any indication." They will be relying on the scientific experts to determine whether the steps Australia has taken are justified. "The experts' comments on all three fireblight, canker and midge were pretty damning."

At stake is a market he estimates could be worth $20 million a year to New Zealand, 3 to 5 per cent of the national crop.

"Our aim wouldn't be to pinch the market off the Australian producers by undercutting them. The biggest opportunity is to grow the market there, because the Australian consumption is very low 6-9kg of apples a head a year, compared with New Zealand's 18kg.

"We would be doing the Australian grower a favour by giving the consumer more choice. They don't have the braeburn or Pacific series of apples there."

He says the two countries' grower organisations get on well, despite the disagreement over access. Both are shareholders in Prevar, a trans-Tasman company set up to commercialise new apple varieties from Plant & Food Research's breeding programme, and they have a common interest in developing the pink lady variety.

"There are constant visits both ways across the Tasman. It's a multilayered relationship and quite close," Mr Beaven says.

"The access dispute is the elephant in the room we don't mention. There's often embarrassed laughs, and then you talk about other things. Rational discussion is not possible we've both backed ourselves into corners and we're not going to agree."

He is confident that once the WTO panel makes a decision, they will be able to move on. Much will depend on whether Australian politicians get involved, as has happened in the past. "I'm detecting a different mood, a political will to put it all behind them."

Mr Corboy says the Australian growers' political influence had been over-exaggerated.

"We've been fighting this since day one and haven't succeeded. New Zealand growers have been just as political, and I don't begrudge them that."

He says New Zealand has yet to put up a good counter-argument. "The minute they do, I'd like to think I'd be mature enough to say, `You've got a point there, mate. I understand where you're coming from'. But New Zealand growers have to understand they can't just get up and say Australia is wrong. They have to back it up."

Mr Beaven laughs at this. "We must have been sitting in different hearings. Every expert either stated directly or implied that Australia's risk assessment has overstated the risk. The experts are independent of either country. It's a typical statement from the Aussies they won't accept they could be wrong. They just turn it back on to us."

The panel's decision will be released to both parties in November for comment and then issued publicly in January. Appeals have to be filed within 60 days.

Mr Beaven says an appeal would only delay the inevitable.

"What we've seen is that in almost all disputes panel cases, there is an appeal. But no appeal has been successful in overturning a decision. You wonder why anyone would bother.

"I would like to think that unless there is a glaring factual error in the decision, both countries would accept it in the spirit of the special bond between our two countries."

AT A GLANCE

Fireblight: Bacterial disease which attacks apple and pear trees. New Zealand has minor outbreaks almost every year.

European canker: A wound infection found in most western districts of New Zealand. Not found in Hawke's Bay, Wairarapa, Marlborough, Canterbury or Otago.

Apple leaf curling midge: Infests trees throughout New Zealand.

New Zealand's export apple production varies between 14 million and 21 million cartons a year. This year, 16.8 million cartons, each containing about 110 apples, will be exported, about 1 per cent of the world market.

Last year's apple exports were worth $400 million, with growers averaging $24.62 a carton. This year, the average will be lower but the total export receipts will be about the same.

The amount of land in production has been falling since a peak of 15,000 hectares in 1998 as other land uses, such as wine, olives and lifestyle blocks, become more profitable.

Fewer than 10,000ha are now planted in apples. New Zealanders eat about 18kg each of apples a year, twice as much as Australia but half that of Turkey, the world's biggest apple munchers.