18 Nov 2014

NZ industry 'not worried' by trade deal

4:00 pm on 18 November 2014

The New Zealand dairy industry sees little to challenge it in its number one market from Australia's newly announced free trade agreement with China.

fonterra  milk powder packaging plant

New Zealand continues to have an advantage for infant formula exports to China for another four years as it has a zero tariff. Photo: PHOTO NZ

The Australian dairy industry had been lobbying hard for a China trade deal that is as good as, if not better, than New Zealand's.

Under the deal agreed yesterday, tariffs on Australian dairy products to China would be phased out over four to 11 years and the 15 percent duty on infant milk formula eliminated over four years.

In one area, it has gained more than what New Zealand has. Most Australian dairy products would not be subjected to the protective safeguards which apply to New Zealand dairy exports to China.

The safeguards mean that tariffs are imposed on any product that goes over the quota.

The New Zealand Dairy Companies Association executive director, Kimberley Crewther, said that would give Australia an advantage for some products, but would not apply to whole milk powder, which is New Zealand's biggest export to China.

"Under the New Zealand agreement, once our exports hit a certain volume each year for the main product categories we no longer enjoy a tariff preference. The effect that will have is that New Zealand will have a tariff preference compared with Australia, up until we hit those volume ceilings in our agreement and after that for some products - for butter and cheese mainly - Australia will enjoy a small tariff preference over New Zealand products," she said.

"For whole milk powder, the Australian industry will also be subject to the safeguard, so we'll actually still have a tariff preference over them.

"The Australians have achieved an improvement on the New Zealand deal, but they have a longer time frame to phase in their deal. They've waited longer to do that, and the fact that they have achieved this deal with narrower safeguard provisions could provide an opening for the New Zealand Government to talk to the Chinese government about whether some of the safeguard provisions that apply to New Zealand products could be eased as well and we'll certainly be encouraging Minister Groser (Trade Minister) to do that."

Ms Crewther said New Zealand would continue to have an advantage for infant formula exports to China for another four years because it already had a zero tariff on those.

Get the RNZ app

for ad-free news and current affairs