Korea Free Trade Agreement better than nothing

17 November 2014

Korea Free Trade Agreement better than nothing

New Zealand’s recently signed Free Trade Agreement with Korea is a positive step in freeing up our trade relations and represents an absolute bottom line for the quality of outcomes for further agreements.

“We appreciate how difficult it has been to reach an agreement with Korea, and are pleased to now be on a level playing field with our trade competitors in that market,” says Dr William Rolleston, Federated Farmers President.

“Free Trade Agreements are about ensuring meaningful liberalisation of agricultural trade by removing trade barriers, tariffs and quotas, and negotiations must be vigilant. We must be careful no to let the long phase-out period affect other trade negotiations such as the TPP.

“Whilst we weren’t the first cab off the rank, and not everything has been included in this agreement, a $65 million reduction in tariffs in the first year is meaningful to our primary industries. This is set to increase by three percent a year for the next 15 years.

“Our beef industry stands to gain a lot from this agreement. Korea is New Zealand’s fourth largest export market by volume, and now set to reduce its 40 percent tariff over 15 years.

“The political sensitivity in reaching this agreement is significant, with Korea’s farmers vehemently opposed to agricultural liberalisation. However, our relationship has been solid with Korea since we stood beside them in the Korean War and we are compatible trading partners, helping this agreement get over the line.

“This isn’t just good business for New Zealand. Reaching an agreement makes good business sense for Korea too. We are a trade friendly country, with most of our imports tariff free, our highest tariff rate being 10 percent. Without a Free Trade Agreement they would risk losing their market share to other competitors we have FTA’s with.

“We commend the efforts that have gone into getting this agreement together, but it’s not over yet. New Zealand and Korea will now have to seek approval of the Fair Trade Agreement before agreeing on a date to bring it into force,” concluded Dr Rolleston.

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