NZIBF acknowledges the passage of the implementing legislation for the New Zealand/European Union Free Trade Agreement and looks forward to the FTA’s entry into force on 1 May.
Guest post: Free trade a fine fit for NZ
Guest post from Lain Jager, Chief Executive of Zespri
New Zealand isn’t a big global player or an economic colossus but we’ve always been an exporting nation and a producer of healthy, tasty food. Although we’re a long way from our major Northern Hemisphere markets, this has increasing appeal to global consumers who want to know the provenance of their food; to know what they’re eating comes from healthy soils and clean water, underpinned by robust quality systems.
To illustrate what trade means for our country, Te Puke is a town of around 8000 people in Bay of Plenty and the unofficial capital of kiwifruit production in New Zealand. Last season saw $610 million directly returned to this community through fruit and service payments from the local kiwifruit industry, with the flow-on effects supporting other industries around the region.
The New Zealand kiwifruit industry has benefited immeasurably from free trade deals with the likes of China, Taiwan and South Korea, though in ways that may not be immediately apparent.
Obviously, the removal of import tariffs has had an immediate and tangible impact for growers; China is set to become our biggest export market, nine years after the historic 2008 bilateral agreement, while Taiwan’s 20 percent tariff on New Zealand kiwifruit was phased out this year.
When New Zealand signed a free trade agreement with South Korea in 2015, kiwifruit growers were paying $22 million a year on a 45 percent tariff just to have access to our eighth-largest country market. It’s important to note that this tariff was built into our Korean pricing, forcing up the price of Zespri Kiwifruit for Korean consumers. By 2019, that tariff will have been completely removed, allowing us to reduce our prices and compete more fairly with other kiwifruit exporters. Our Southern Hemisphere kiwifruit competitor Chile had no tariff barrier to Korea so dismantling this tariff puts us on an equal footing in the market; we passed the price savings on directly to Korean consumers and we’ve been able to invest more in the Korea market which is set to grow sales by 10 percent each year over the next five years. Korean sales grew 41 percent from 2014 to 2016 as the tariff reduction came in, creating an additional $10.5 million in value.
Similar free trade agreements with India, Japan, Britain and Europe would be equally beneficial. Last year, for instance, our growers paid $25 million in tariffs to Japan which equates to around $1,900 for every hectare of kiwifruit grown in New Zealand.
New Zealand kiwifruit attracts a 30 percent tariff in India while the tariff on Chilean kiwifruit is now down to 15 percent, putting us at a real disadvantage in this huge and promising market. That’s not good for New Zealand growers or Indian consumers. Tariffs on New Zealand kiwifruit do not protect Indian kiwifruit growers because New Zealand kiwifruit is counter seasonal with Indian kiwifruit so we do not compete with local production, except for perhaps to a limited extent on the shoulders of the growing seasons. What the tariff actually does is slow up Zespri’s entry into the exciting Indian market and therefore slows up the development of the kiwifruit category in India as a whole – and that’s not good for Indian kiwifruit growers.
Nearly 40 percent of Zespri Kiwifruit is sold in the EU so the prospect of an FTA removing the 8.8 percent tariff would mean lower prices for European consumers and better profitability for NZ kiwifruit growers. Most importantly it would allow us to compete fairly for market share against the tariff-free Chilean competition.
When trade doors are opened wide, not just money and material goods crosses borders. People, investment and ideas soon follow and relationships grow. For Zespri that means licensing our world-leading kiwifruit varieties to local growers in the Northern Hemisphere with the fruit marketed under the Zespri brand in the Northern Hemisphere season. That’s great for our offshore growing partners who benefit from growing the world’s best cultivars and the Zespri marketing system. It’s also very good for our New Zealand growers who benefit from the strong brand recognition that comes from supplying the market year-round, supported by marketing.
Importantly this is not just about New Zealand exporting its goods to consumers in other countries. It’s about sharing intellectual property and know-how supported by deep, mutually-beneficial long-term relationships with kiwifruit producers throughout the Northern Hemisphere.
Zespri sold $2.2 billion of premium Zespri Kiwifruit to 59 countries around the world last season and a newly-released report from the University of Waikato shows the industry is on track to create 29,000 new jobs around the country by 2030. The reality is that we are a small trading nation with an economy dependent on exporting to make our way in the world.
REGISTER WITH TRADE WORKS
Register to stay up to date with latest news, as well as saving and discussing articles you’re interested in.
Latest News
NZ/EU FTA A BONUS FOR SOME SECTORS – BUSINESS FORUM
Media release, 22 March 2024 The NZ International Business Forum (NZIBF) acknowledges the passage of the implementing legislation for the New Zealand/European Union Free Trade Agreement and looks forward to the FTA’s entry into force on 1 May. “This agreement was...
“MEAGRE OUTCOME” FROM WTO IN ABU DHABI – BUSINESS FORUM
Media release, 2 March 2024 Despite its overwhelming importance at the heart of the international trade system, members of the World Trade Organisation (WTO) have concluded their Ministerial in Abu Dhabi (“MC13”) with only a meagre outcome. NZ International Business...
To go or woe with the WTO?
We’ve been here before with the World Trade Organisation (WTO). The global trade body’s 13th Ministerial meeting (“MC13”) opens in Abu Dhabi on Monday 26 February, with Trade Minister McClay serving as Vice-Chair. In recent weeks diplomats, trade...
DCANZ – Agricultural Subsidy Distortions Must Be Addressed
23 February 2024 - Media Release by the Dairy Companies Association of New Zealand (DCANZ) As the world’s Trade Ministers head to a WTO meeting in Abu Dhabi, the Dairy Companies Association of New Zealand (DCANZ) is calling for an immediate capping of agricultural...
Asia-Pacific business leaders call for greater economic dynamism with people at the center of the APEC agenda
16 February 2024 - APEC NEWS RELEASE Issued by The APEC Business Advisory Council (ABAC) The APEC Business Advisory Council (ABAC), meeting this week in Kuala Lumpur, Malaysia, expressed deep concerns about the growing pressures of economic fragmentation and the risks...
SUBMISSION TO THE PARLIAMENTARY FOREIGN AFFAIRS, DEFENCE AND TRADE COMMITTEE – FEBRUARY 2024
NEW ZEALAND EUROPEAN UNION FREE TRADE AGREEMENT LEGISLATION AMENDMENT BILL Introduction and Summary This submission is made on behalf of the New Zealand International Business Forum (NZIBF) and Export NZ. NZIBF is a forum of senior business leaders working...
ABAC Statement on WTO MC13 – February 2024
Now, more than ever, the world needs a credible, relevant, and effective multilateral trading system, with the World Trade Organization (WTO) at its core. In this era of global challenges, the APEC Business Advisory Council (ABAC) recognizes that the WTO is...
Global Industry Statement on the WTO Moratorium on Customs Duties on Electronic Transmissions
NZIBF has joined 170 international business associations in calling for an extension to the current moratorium on tariffs applying to digital services (like Netflix) at the forthcoming WTO Ministerial meeting. The undersigned associations urge WTO members to support...
Resilient supply chains: Yesterday, today and tomorrow
Published by the Hinrich Foundation, Singapore, 23 August 2024 By Stephen Jacobi History has much to teach us about the way trade contributes to prosperity through the movement of goods, services, people, and ideas. Today, data can be added to this web of...
SUBMISSION TO THE MINISTRY OF FOREIGN AFFAIRS AND TRADE
GENERAL REVIEW OF THE COMPREHENSIVE AND PROGRESSIVE AGREEMENT FOR TRANS- PACIFIC PARTNERSHIP (CPTPP) DECEMBER 2023 Summary This submission is made on behalf of the New Zealand International Business Forum (NZIBF). As individual NZIBF Members may make their own...
Todd McClay – your trade mission, should you choose to accept it …
As published by Newsroom 19 December 2023 By Stephen Jacobi “Twas the week before Christmas, When all through the house Not a creature was stirring, Except busy trade officials … ‘Tis the season to be “BiM-ing”* and the NZ International Business Forum has sent its...
2023 – Steps forward and back
Trade liberalisation moved forward and backward in 2023. Some notable gains have been achieved for New Zealand, but war, geo-political rivalry and global inflation continue to depress global markets. While the pandemic continued to lurk in the shadows, 2023 was the...
NZIBF releases Brief to the Incoming Minister of Trade
DECEMBER 2023...
NZIBF 2023 Chair Report
I am pleased to present my third report on the activities and achievements of the NZ International Business Forum (NZIBF) for 2023-24, our sixteenth year of operations. I am grateful to all Members and to our executive team for your continuing support. As I...
Of APEC, CPTPP and IPEF
While New Zealand was sorting out its new Government, the alphabet soup which is trade got a good stirring in San Francisco. This was APEC Leaders’ week, the annual gathering of Leaders, Ministers, business people and other stakeholders from the 21 economies of...