The Dairy Companies Association of New Zealand (DCANZ) is welcoming the agreement in-principle of the United Kingdom – New Zealand free trade agreement (FTA).
“Reaching a point of complete elimination of all dairy tariffs five-years after entry-into-force will make this a high-quality FTA” says DCANZ Chairman Malcolm Bailey. “This is the ambition we expect for an FTA with a developed OECD economy, and the UK has now set the bar”.
The agreement will also provide new trade opportunities for New Zealand dairy exporters from day one. All dairy products except butter and cheese reach the point of duty free trade over three years. For butter and cheese, DCANZ is pleased to see the agreement include transitional quotas which will provide for some duty-free trade during the 5-year tariff elimination period. New Zealand cheese exporters will have access to a tariff free quota which starts at 24,000 tonnes and grows to 48,000 tonnes over the five-year period. For butter, a duty-free quota with a starting volume of 7,000 tonnes grows to 15,000 tonnes over the 5-year period.
“The New Zealand and UK trade ministers and their negotiating teams must be congratulated for this outcome. They have overcome significant challenges in carrying out a negotiation amidst COVID-19 related travel disruption to deliver an outstanding outcome in a relatively short amount of time.”
While DCANZ is still digesting the full detail of the in-principle agreement, its initial assessment is that it will diversify trade opportunities for New Zealand dairy exporters. The UK is the world’s second largest dairy import market. However, the EU has been the dominant source of UK dairy imports due to the duty-free terms it has enjoyed since 1973. In contrast New Zealand dairy products have faced out of quota tariffs around 45% for butter and cheese. New Zealand supplied less than 1% of UK dairy imports in 2020.
“This agreement will provide a long-awaited level playing field for New Zealand dairy exports to the UK market” says Bailey. “UK consumers will benefit from the choice of high-quality and sustainably produced New Zealand dairy product.”
The UK is walking the talk of trade liberalisation. It is the first G7 country to match longstanding political rhetoric in support of removing barriers and distortions from global agricultural markets, with actual comprehensive agricultural tariff elimination in its trade arrangements.
The UK’s delivery of comprehensive agricultural tariff elimination in its FTAs with both New Zealand and Australia contrasts starkly with the maintenance of trade limiting dairy tariff fortresses by the EU, US, Japan and Canada.
“We encourage the EU to look to the UK as an example to be followed in its current bilateral negotiation with New Zealand” says Bailey.
DCANZ is also looking forward to the timely advancement of the UK’s accession process for CPTPP agreement.