But after two years of trying for their early removal the Labour-led Government decided it was time to wave the white flag on the dairy tariffs.
Ahead of her visit to Beijing in April Prime Minister Jacinda Ardern indicated tariffs on wood products and paper would be the new priority for NZ in the talks.
However, an insider said that got a cool reception from the Chinese at the most recent negotiating round in Wellington on May 6-8.
Chinese negotiators told their NZ counterparts their demands tariffs on wood products be scrapped violated a commitment by both sides at the outset of the negotiations not to push for increased access for goods exports over and above what was granted in the original 2008 agreement.
“Dairy safeguards got the same treatment as wood tariffs, which was ‘thank you for your comments but market access issues are not on the agenda for the upgrade’,” the source said.
Another insider was only marginally more optimistic about the chances of progress.
He said both sides agreed before the upgrade talks began that either one should be allowed to raise issues of importance to them.
The clause was inserted at NZ’s instigation to get dairy safeguards on the table for discussion.
That was about dairy and now it has become wood products.
The former trade negotiator said NZ is likely to keep plugging away on wood tariffs for now.
That’s because China does not always stick to the script when re-negotiating trade agreements.
“There have been concessions granted to Chile and a number of developing countries in that space.
“So there is an argument that it is not new, unique market access but matching what others have achieved.”
However, there are other obstacles in the way of progress being made on wood tariffs.
Not the least of them is an undertaking China gave to Canada in the late 1990s not to reduce tariffs on imported wood products for one country without extending the reductions to all countries.
That was in exchange for the North American lumber giant’s backing of China’s accession to the World Trade Organisation and was the principal reason why wood products are one of the few products not to achieve a timetable for eventual tariff elimination in China’s free-trade deal with NZ.
Asked how much of a stumbling block to NZ getting wood tariffs scrapped that was Trade Minister David Parker wasn’t giving much away.
“I am well aware of the issues raised by the NZ wood processing industry and well briefed on those issues and we are trying to fix what we can through the free-trade agreement that relates to tariffs.”
Parker had no comment about VAT rates at the Chinese border in favour of log imports over processed wood products.
The industry has long argued they push up the price of logs here and are more damaging to exports of wood products to China than tariffs, which are in the low single digits.
Last September Parker asked the Ministry of Foreign Affairs and Trade to look into the effect foreign subsidies have on the competitiveness of the wood processing industry.
