6 Nov 2018

Renewed FTA deal unlikely to bear more benefits for dairy industry

7:55 am on 6 November 2018

New Zealand looks highly unlikely to secure a better deal for dairy exporters as part of an improved free trade agreement with China.

Serving fresh milk in a glass vase on a wooden table

New Zealand's dairy products are hit with higher tariffs once they reach a certain amount in China. Photo: 123RF

Under the current agreement, New Zealand's dairy products are hit with higher tariffs once they reach a certain amount.

Those limits automatically expire by 2022 and 2024, but the dairy industry had hoped to bring those dates forward as part of negotiations to upgrade the overall deal.

Trade Minister David Parker flew to Shanghai on Sunday to attend the China International Import Expo and sat down for more than an hour with China's Vice Commerce Minister Wang Shouwen who is responsible for the bilateral trade relationship.

Speaking to RNZ from Shanghai, Mr Parker refused to say whether the early removal of dairy tariffs was still on the table, but downplayed the prospect.

"In reality, those limits expire in the next three to five years anyway," he said.

"By that point, New Zealand will have the best dairy access into China of any country in the world, so it's hard for us to do better than that."

Mr Parker said "in effect" it would be better for New Zealand to simply wait for those limits to run out rather than try renegotiate the arrangement.

"For us to do better on that in the short term, we'd have to give up on other things in the negotiation that we might not want to.

"So our focus on the upgrade is much wider than dairy. We're trying to update it for services and also ... things like electronic commerce that didn't exist ten years ago."

The dairy tariff safeguards were designed to protect China's two million dairy farmers from an influx of NZ dairy products and were devised at a time when few expected there to be quite so much demand from China.

Those volumes have been exceeded easily each year.

The two countries agreed to scope out a better trade deal in 2016. At the time, then-Prime Minister John Key said he had received assurances that more access for NZ's dairy products would be critical to any new agreement.

Trade talks finally got underway in April last year.

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