Onions NZ Inc

UPDATE ON FREE TRADE AGREEMENT NEGOTIATIONS

By James Kuperus : Chief Executive, Onions NZ Inc.

With no international travel able to take place due to Covid-19, Free Trade Agreement (FTA) negotiations took a brief hiatus.

FTAs provide the enabling blocks for trade such as tariff reductions and country of origin rules. Like private businesses, the government has moved to meeting online rather than in person. This has allowed government to recommence negotiations, which have accelerated in recent months.

The following is a brief update on the latest developments which are relevant to the New Zealand onion sector.

NZ-UK FTA

The fourth round of negotiations is scheduled for mid to late April. Steady progress has recently been made across the agreement with the small and medium sized enterprises (SMEs). Both parties have welcomed the initial goods market access offer exchange in the previous round (round three). During the round, both parties introduced their respective goods offers and discussed their positions and expectations. Onions New Zealand is seeking tariff removal from the current 8%. This is essentially an 8% tax that New Zealand is paying over and above our competitors such as the Netherlands and South Africa.

PACER Plus (Australia, Cook Islands, Kiribati, Nauru, New Zealand, Niue, Samoa, Solomon Islands, Tonga, Tuvalu, Vanuatu)

PACER Plus entered into force on 13 December 2020, and the focus now is for PACER Plus Parties to stand up the institutional structures to support implementation of the agreement. This agreement focusses on not only trade but also economic development of the Pacific.Tariffs are already very low or 0% for onions with those involved in the agreement.

Regional Comprehensive Economic Partnership (RCEP)

RCEP was signed in November 2020 and presented to the House of Representatives on 8 December 2020 for Parliamentary Treaty Examination. RCEP is being considered by the Foreign Affairs Defence and Trade Committee (FADTC). Fifteen countries are party to this agreement, including China, South Korea and South East Asia nations. Almost all of the countries involved have 0% tariffs on onions already.This agreement however, has benefits for the onion industry around rules of trade, and times to clear customs etc.

EU-NZ FTA

The ninth (virtual) round of EU-NZ FTA negotiations took place in November. New Zealand onion growers and exporters currently pay a 9.6% tariff into Europe. As our largest trading partner this is a substantial and trade prohibitive tax that we face. Removing this tariff will make New Zealand more competitive on pricing against our competitors who have no tariff currently.

ASEAN-Australia New Zealand Free Trade Area (AANZFTA)

AANZFTA senior officials agreed on 2 October 2020 that the first round of upgrade negotiations will be held in first quarter 2021 (likely March) with a view to concluding an agreement within two years. The negotiations will be held virtually, with some preparatory work occurring during the remainder of the year. To date, AANZFTA has delivered great benefits and results for the New Zealand onion sector, with exports increasing 658% since the inception of the agreement in 2010. Onions New Zealand will work with government to identify areas of improvement for our sector to assist with the free flow of trade.

Comprehensive and Progressive Trans Pacific Partnership (CPTPP)

On 1 February, the United Kingdom became the first to formally request accession to the CPTPP since its entry into force on December 2018. The UK’s formal request triggers a process of consultations before the UK can be accepted as being a member of CPTPP. It would be expected that the UK substantially reduces tariffs to enter this agreement, which will benefit our sector significantly. We currently pay an 8% tariff on onions when they enter the UK.