NZ-China FTA upgrade agreement

The announcement that an agreement has been reached on the upgrade of the New Zealand-China Free Trade Agreement (FTA) is recognised by the Dairy Companies Association of New Zealand (DCANZ) as a positive marker for the strength of the relationship between New Zealand and China.

The fact that the agreement comes without improvements to the dairy safeguard arrangements is no surprise to DCANZ. The potential for this outcome was foreshadowed in late 2018.

“DCANZ is naturally disappointed that the upgrade has not resulted in specific gains for dairy market access” says DCANZ Chairman, Malcolm Bailey. “That said, the existing FTA provisions will provide duty free access for all New Zealand dairy export to China when the last dairy safeguard ends in 2024.”

“This complete elimination of all tariffs is an ultimate outcome that we seek from all FTAs. In this regard we see the New Zealand-China agreement as a best-in-class trade deal and seek similar high-quality outcomes in other of New Zealand’s trade negotiations.”

DCANZ congratulates the New Zealand Government for concluding the upgrade negotiations and appreciates the work that continues to be undertaken to strengthen the broader New Zealand-China trade relationship.

“China remains New Zealand’s number one dairy market, and we value the ongoing constructive relationship between our two countries”.

The ongoing application of safeguards by China over the next four years will result in New Zealand dairy exports incurring in excess of $100 million in tariffs each year. Additionally, New Zealand dairy exporters of milk powders, cheese and butter will be at growing disadvantage relative to Australian competitors until the dairy safeguards end.

Beyond China, dairy products continue to experience highly constrained access and significant tariffs into many markets. A 2017 report by NZIER estimated that tariffs suppress the value of current New Zealand dairy production and exports by an estimated $1.3 billion annually, and non-tariff barriers have been estimated to add over $3 billion in costs to dairy exports in the APEC regional alone.

“This is significant for a sector that is a major contributor to economic activity in regional New Zealand and which is committed to investing to improve sustainability and the value of our production” says Bailey.

“An additional $1.3 billion of export returns would go a long way in supporting additional investment to grow value and sustainability”.

ENDS

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