Friday, March 29, 2024

Non-tariff barriers next hurdle

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A shift in New Zealand’s trade strategy looks to be underway as primary industry bosses question the value in launching yet more tariff-tackling negotiations when potentially larger obstacles to trade exist elsewhere.
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The recent deal with South Korea meant NZ now had trade agreements with six of its top 10 export markets.

Of the remaining four (the United States, Japan, the European Union and India) negotiations were under way for tariffs-busting deals either through the 12-country TransPacific Partnership or in bilateral talks either underway or expected soon.

Meat Industry Association trade and economic manager Philip Houlding said governments over a number of years had done a good job in winning tariff reductions in major markets for its members.

“There are only two major markets left where there are significant beef tariffs (Japan and the EU) and for sheep meat, the 30% tariff in India is the only one that really springs to mind.

“All of these are already on the trade negotiations agenda for Government, one way or another,” Houlding, a former diplomat and trade negotiator, said.

Trade sources have told Farmers Weekly that Turkey and Bangladesh are next in the Government’s sights for new negotiations. Neither is in NZ’s top 25 export markets.

Rather than targeting tariff deals in second-tier markets, Houlding believed tackling trade-restrictive practices in bigger markets might deliver a better pay-off.

Meat companies had been plagued with such problems in the biggest market in recent times.

Foremost was the slowness of Chinese bureaucrats to list export processing plants which hindered the industry from taking full advantage of booming demand and tariff reductions from the 2008 trade agreement with China.

Houlding said less high-profile but still costly examples existed in other markets including excessive labelling requirements, burdensome plant audits and unscientific processing requirements, such as having to freeze cartons to a lower temperature than scientifically justified.

“The cost of non-tariff barriers is almost certain to be more significant in future.”

In Australia the meat industry had calculated the cost of non-tariff measures at $1.25 billion a year.

Houlding said the meat, dairy, horticulture, seafood and wine industries had recently approached the Ministry of Foreign Affairs and Trade to help fund the work needed to come up with a comparable figure for NZ exporters.

Without such a figure it would be difficult to convince the Government to channel more resources into tackling non-tariff barriers.

Horticulture Export Authority chief executive Simon Hegarty said a spate of deals in Asian markets in recent years meant tariffs were less of an issue than they had been previously but technical barriers to horticultural exports remained.

For example, the recent deal with Korea outlined a pathway to zero tariffs on kiwifruit but continued to bar apples.

“As we do more free trade agreements the value of future deals might be much less and there would be greater value in getting some success in some non-tariff measures.”

Dairy Companies Association executive director Kimberly Crewther agreed technical barriers to trade were becoming more of an issue for exporters as more trade deals were done and tariffs lowered.

But she said that was not to say the dairy industry didn’t want the Government to launch more.

“There are still some key markets that would benefit from free trade agreements, for example, in Africa and Southeast Asia and we support the Government looking at those but equally there is also a need to now focus on ensuring the promise of the free trade agreements is fully realised by also addressing non-tariff barriers to trade.”

An executive at a large primary industry marketer said while he agreed with increasing efforts to break down non-tariff barriers it shouldn’t necessarily be at the expense of pursuing new trade agreements.

He said if the viability of new trade deals was judged by the size of a country's existing trade with NZ the Government would have never had started talks with China which was a much smaller market when negotiations were launched than it is now.

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