Primary sector to benefit from TPP

DairyNZ chairman John Luxton said the sticking point for dairy was opposition from Japan, the US and Canada.
DairyNZ chairman John Luxton said the sticking point for dairy was opposition from Japan, the US and Canada.

New Zealand's primary sector looks to have come out of the Trans Pacific Partnership agreement favourably, with the notable exception of the country's biggest export - dairy.

After years of negotiation, the controversial trade deal was finalised in Atlanta in the Unied States this morning.

The agreement provides for the complete elimination of tariffs on New Zealand's exports to TPP nations, but with only partial liberalisation of the dairy trade.

DairyNZ chairman and former agriculture minister, John Luxton, said the sticking point for dairy was opposition from Japan, the US and Canada.

"I think that the pressure that the US dairy lobby, the Japanese co-operative lobby, and the supply-management system in Canada, along with the Canadian election, have all conspired to prevent a quality outcome for dairy," he said.

"The US dairy industry is as much at fault as anybody, in the process of looking backwards rather than forwards, particularly given that they are that they are by far the biggest exporter of dairy in the TPP area."

The US accounts for 50% of the TPP dairy trade, compared with 30% for New Zealand.

Fonterra chairman John Wilson, in a statement issued from Atlanta, said the conclusion of the agreement was a "small but significant step forward for the dairy sector".

"Dairy has been very hard to resolve and New Zealand has managed to get some progress against the odds," Mr Wilson said. He added the "entrenched protectionism" demonstrated by the US dairy industry in particular had ensured that the deal on dairy failed to reach its potential.

While the agreement was less than ideal for dairy, it did favour several of the other heavy hitters in the primary sector such as meat and horticulture.

'Best possible deal'

Beef and Lamb New Zealand and the Meat Industry Association (MIA) said negotiators had secured the best possible deal for sheep and beef farmers.

"The TPP will have a significant impact on the competitiveness of our exports in TPP markets," Beef and Lamb chairman James Parsons said.

The sheep and beef sector's exports to TPP countries were worth more than $2.4 billion in 2014, nearly one-third of the sector's total exports. That trade incurred about $94 million in tariffs last year. New Zealand does not have free trade agreements (FTAs) with Japan, the US, Canada, Mexico or Peru.

"This deal is particularly important for us in relation to those markets, some of which currently charge very high tariffs on our exports but are highly valuable to the sector," Meat Industry Association chairman Bill Falconer said.

New Zealand's FTAs saved $161 million in tariffs on the sheep and beef sector's global exports last year, and the conclusion of the TPP means that number will continue to grow, he said.

Federated Farmers president Dr William Rollestons said the deal, although not as comprehensive as the farmers organisation would have liked, appeared to be beneficial for New Zealand agriculture. 

Kiwifruit marketer pleased 

Kiwifruit marketer Zespri said the agreement would generate significant value for the New Zealand industry.

Zespri says most of the beneficial impact would be in its biggest market, Japan.
Zespri says most of the beneficial impact would be in its biggest market, Japan.

Tauranga-based Zespri said the deal would eliminate tariffs on kiwifruit exports into all 12 Asia-Pacific nations when it comes into force.

Zespri chief executive Lain Jager said most of the beneficial impact would be in Zespri's biggest market - Japan, where the industry paid over $15 million in tariffs last year.

"If this tariff relief was passed straight through to New Zealand growers, it would equate to savings of over $1000 for every hectare of kiwifruit grown in New Zealand," Jager said

Tariff elimination would also benefit Japanese consumers by supporting Zespri's competitiveness against other fruit in Japan, he said. Zespri's annual sales volumes to Japan are expected to increase around 9% over the next five years.

The other countries in the agreement - Brunei, Chile, Singapore, USA, Australia, Peru, Vietnam, Malaysia, Mexico, Canada - either do not have tariffs on kiwifruit, have existing free trade agreements with New Zealand or do not currently import its kiwifruit.

Wine sector 

For the wine sector, New Zealand's sixth biggest export earner, the agreement was seen as a positive.

"This is an excellent outcome for the New Zealand wine industry' Philip Gregan, New Zealand Winegrowers chief executive Philip Gregan said.

"Finalising the TPP is strategically very important for our export future as the TPP countries already account for over 60 per cent of New Zealand wine exports," he said.

New Zealand wine exports are currently valued at $1.46 billion and the industry is aiming to achieve exports of $2 billion a year by 2020.

- By Jamie Gray of the New Zealand Herald

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