Under the NZ:China Free Trade Agreement (FTA) there is a limit placed on the volume of dairy products which can be imported into China at a reduced tariff rate.
The 2016 milk powder quota allows 140,358t of product to enter China at a special tariff rate of 2.5%. This quota was exceeded on 19 January so any milk powder imported into China beyond that date is subject to the normal tariff rate of 10%.
A small portion of the quota (25,401t) was pre-filled from last year, as when the 2015 quota was filled this product was already in transit to China. This means that nearly 115,000t of NZ sourced milk powder entered China by 19 January 2016. This volume is greater than that imported into China during the whole of January 2015. It is also significantly higher than the volumes imported by China in recent months.
Source: China Customs
The quotas for milkfat (butter and AMF) and cheese have also been filled. The milkfat quota allowing 13,777t of product to enter China at a 1% tariff was reached on 6 January. The cheese quota was hit on 12 January. This allowed of 5,319t of cheese into China at 1.2% as opposed to its normal tariff rate of 12%.
Under the FTA the volume of product allowed to enter China at a reduced tariff rate is increased each year and the reduction in the tariff rate also increases. The aim was to gradually faze out all import tariffs. Quota limits were included in the FTA to provide some protection to China's domestic dairy industry from a flood of imported product. However when the FTA was drawn up in 2008 there was no indication that China's demand for imported dairy products would increase so dramatically in the subsequent years.
When the FTA was drawn up the quota limits were greater than the annual volumes of dairy products that China was importing from NZ. In 2008 China imported just 50,594t of milk powder from NZ. However the following year this volume shot up to more than 200,000t as China looked to NZ for a supply of safe milk powder in the wake of the melamine scandal in which several infants died after consuming contaminated infant formula.
|
Milk powder (WMP/SMP) quota |
Milk powder tariff |
Milkfat quota |
Milkfat tariff | Cheese | Cheese tariff | |
| Base Rate | 10 | 10 | 12 | |||
| Entry | 95,000 | 9.2 | 9,400 | 9 | 3,600 | 10.8 |
| 2009 | 99,750 | 8.3 | 9,870 | 8 | 3,780 | 9.6 |
| 2010 | 104,738 | 7.5 | 10,364 | 7 | 3,969 | 8.4 |
| 2011 | 109.974 | 6.7 | 10,882 | 6 | 4,167 | 7.2 |
| 2012 | 115,473 | 5.8 | 11,426 | 5 | 4,376 | 6 |
| 2013 | 121,247 | 5 | 11,997 | 4 | 4,595 | 4.8 |
| 2014 | 127,309 | 4.2 | 12,597 | 3 | 4,828 | 3.6 |
| 2015 | 133,675 | 3.3 | 13,227 | 2 | 5,066 | 2.4 |
| 2016 | 140,358 | 2.5 | 13,888 | 1 | 5,319 | 1.2 |
| 2017 | 147,376 | 1.7 | 14,582 | 0 | 5,585 | 0 |
| 2018 | 154,745 | 0.8 | 15,312 | 0 | 5,864 | 0 |
| 2019 | 162,482 | 0 | 16,077 | 0 | 6,157 | 0 |
| 2020 | 170,606 | 0 | 16,881 | 0 | 6,465 | 0 |
| 2021 | 179,137 | 0 | 17,725 | 0 | 6,788 | 0 |
| 2022 | 188,094 | 0 | 0 | 0 | ||
| 2023 | 197,498 | 0 | 0 | 0 |
