3 Blow for top cattle event Vol 17 No 4, January 29, 2018
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Good trade news Nigel Stirling
E
nigel.g.stirling@gmail.com
XPORTERS are eagerly anticipating getting back on a level playing field with competitors in several key markets now the Trans-Pacific Partnership has finally been agreed. The 11 participating Pacific Rim countries have overcome differences that prevented the deal from being agreed in Vietnam last November and now intend to formally sign it off in March. Lawmakers from at least six countries must then pass the deal through their respective parliaments before the agreement can enter into force and tariff cuts take effect. That cannot come soon enough for beef exporters who have lost market share to Australian rivals in the Japanese market following a 2015 trade deal between the two countries. That deal saw tariffs on Australian frozen beef drop to 27.2% by last year compared to the standard rate of 38.5% faced by other importing countries. A bad situation was made even worse for New Zealand exporters when Japan countered a surge in beef imports with a 50% tariff for 12 months from last April. As a result NZ beef exports in August and September slumped to 729 tonnes from
1709 tonnes for the same period the year before and a five-year average of 1840 tonnes. Under TPP the level playing field will be restored immediately with Japan agreeing to cut tariffs for all member countries to 27.5% on the deal’s entry into force, with cuts in subsequent years to 9%.
The trade agreements that the EU have done with Mexico and Japan mean that they would progressively, in the absence of TPP, have gained a tariff advantage over us. Malcolm Bailey Dairy Companies Assn A similar situation is playing out in the Japanese and Mexican dairy markets with tariff-busting deals with the European Union either having recently been concluded or under way. Dairy Companies Association chairman Malcolm Bailey said TPP will keep NZ exporters competitive in the face of rival trade deals in those markets. “The trade agreements that the EU have done with Mexico and Japan mean that they
would progressively, in the absence of TPP, have gained a tariff advantage over us. “I am not sure that we get exact parity there but we at least stop going backwards, which means we can compete.” Now a deal has been agreed the TPP countries are expected to turn their minds to new members. Front of the queue is South Korea, which is understood to have adopted many of the terms of the TPP in its own trade deals, which it hopes will enable it to seamlessly dock into the 11-country agreement. Even though NZ and South Korea have a free-trade deal the negotiations concluded in 2015 failed to significantly open the Korean market for milk powder. The deal was for an initial tariff-free quota of a mere 1500 tonnes a year, rising by 3% a year to a maximum of 1957 tonnes after 10 years, representing little more than two days’ production from Fonterra’s Edendale factory. Similarly, deer farmers felt hard done-by with the agreement to phase out a 20% tariff on dried velvet over 15 years while leaving in place the same tariff on frozen velvet, which comprises by far the larger part of the trade with Korea. However, the Government’s agricultural trade envoy Mike Petersen said the game plan for NZ negotiators had always been to revisit those arrangements once South Korea joined the TPP.
“It is an opportunity for us to have another discussion with Korea about what additional access we might be able to get and where we might be able to rectify some of the issues that weren’t addressed when we put that deal together.” Furthermore, TPP’s requirement for sign-off by all existing members before new ones can join provides NZ with greater bargaining power than in earlier bilateral talks with the Koreans. “It does provide a fair bit of leverage for existing members to have conversations with new members and seek additional access.” Other countries previously touted as possible entrants to an expanded TPP include Indonesia, Thailand, China, Taiwan, Colombia and, most recently, the United Kingdom.
NEW WORLD: The window to green pastures for Kiwi exporters has been opened with the Trans Pacific Partnership deal, special agricltural trade envoy Mike Petersen says.
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