1 November 2018

The Dairy Companies Association of New Zealand (DCANZ) welcomes the news that the Comprehensive and Progressive Trans Pacific Partnership (CPTPP) will be implemented this year, on 30 December.

“We congratulate Trade Minister David Parker and trade officials on the progress they have made” says DCANZ Chairman Malcolm Bailey. “Having six countries now ratify CPTPP means that we are now on a short countdown to getting the first set of tariff cuts for dairy access into the CPTPP markets”.

For dairy exporters, the timing means that there will also be a second round of tariff cuts delivered again in January 2019.

“While CPTPP unfortunately does not deliver a high-quality outcome for dairy access across all markets, there are still some useful gains to be had, including in key markets such as Japan and Mexico” says Bailey.

“Having a double-hit of tariff cuts in close succession into these CPTPP markets is an important outcome for our dairy industry. It means our exporters won’t end up at a tariff disadvantage against competitors such as the EU, in key markets such as Japan”.

There have been some big trade developments in the trans-pacific region over the past year, including the conclusion of FTA negotiations between Japan and the EU, an upgraded EU-Mexico FTA and an announcement that Japan and the US will launch bilateral trade negotiations. Both Mexico and Japan are key markets for New Zealand dairy exports, with the Japanese market worth more than $815 million for New Zealand dairy exporters in 2017 and exports to Mexico valued at $300million for the same period.

“DCANZ acknowledges the considerable efforts of successive Trade Ministers, over more than a decade, in getting to this point” says Bailey. “We also look forward to other elements of the New Zealand trade agenda delivering concrete steps towards the elimination of the significant remaining barriers to dairy trade”.

The dairy sector directly provides income for 40,000 people, located in all regions of New Zealand, providing the highest average wage in the wider farming sector and in food manufacturing. Together the dairy farming and dairy processing industries are also top 10 purchasers of output from a third of all other New Zealand industries.

A February 2017 report by NZIER estimated that dairy tariffs are reducing the returns for existing New Zealand dairy exports by around $1.3 billion per year and non-tariff measures add over $3 billion in costs to New Zealand dairy exports in the APEC region alone.

“Dairy would not be able to play such a critical role in supporting the vibrancy of our regional economies without the trade liberalisation that has occurred over the last 40 years. Further trade liberalisation will enable better value returns from New Zealand’s existing dairy production” says Bailey.

ENDS

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