Launch of New Zealand China FTA Upgrade is Good News

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Dairy Companies Association of New Zealand (DCANZ) welcomes the announcement that New Zealand and China are commencing negotiations towards a Free Trade Agreement (FTA) upgrade.

The New Zealand China FTA has supported the development of dairy trade and dairy related investment between New Zealand and China over the last eight years. DCANZ is pleased that both Governments have committed to exploring how this framework can be further enhanced.

“DCANZ’s priority is for more comprehensive coverage of trade during the period of transition to full tariff elimination for dairy products in 2024, in recognition of strong Chinese import demand,” said DCANZ Chairman Malcolm Bailey.

Overall the New Zealand China FTA is a high quality agreement, which features a complete elimination of all import tariffs on all dairy products in 2024.

However, current transition arrangements mean less than a quarter of the dairy products that China is importing from New Zealand are receiving tariff reductions.

DCANZ said the rapid expansion of Chinese consumer demand for dairy products was not anticipated when the agreement was originally negotiated.

“Extending the coverage of tariff preferences will reduce tariff related costs for Chinese consumers. It will also ensure that New Zealand exporters do not end up at a tariff disadvantage to Australian exporters as we transition towards tariff elimination,” said Mr Bailey.

The Australia China FTA does not feature the same quantitative limits on tariff preferences for butter and skim milk powder.

Imported dairy products play an important role in complementing local production to meet Chinese consumers demand for dairy nutrition.

“Despite the expansion in both domestic production and imports over the last decade, Chinese [per capita] dairy consumption remains low. It’s around half of the Asian consumption average and a third of the global average dairy consumption level”, said Bailey.

New Zealand exported NZ$2.77 billion of dairy products to China in 2015.