Non-tariff barriers costly for meat business

Sirma Karapeeva, MIA trade and economic manager.

With tariff barriers falling through successful trade negotiations, the focus for the red meat sector is now moving towards the non-tariff barriers to trade (NTBs) which can, in some instances, prevent trade completely.

Maintaining and improving access into as many markets as possible is a major goal for the highly export-orientated industry that exports 85 percent of its production to around 120 countries every year.

Traditionally, the focus has been on the costs of access that are imposed by tariff barriers. While still significant – around $300 million annually – tariffs have been falling through successful trade negotiations and are likely to decrease more significantly following the entry-into-force of the Korea-NZ free trade agreement (FTA) and the signing of the Trans Pacific Partnership (TPP) agreement.

Meat industry attention has now moved towards NTBs because they are often applied with little or no warning by importing countries,  sometimes coming to light only when a consignment is held up at the border for some new or altered requirement, notes the Meat Industry Association (MIA)’s trade and economic manager, Sirma Karapeeva.

NTBs for the meat sector come in a variety of forms, but can generally be grouped into the following categories: auditing and registration requirements, certification requirements, onerous import checks, lack of transparency of requirements, inconsistent technical requirements, document consularisation and prescriptive labelling requirements, she explains.

Hidden costs

A number of studies have been undertaken to try to quantify the impact of NTBs. This has been challenging, mainly because the costs are often hidden, but there is a growing consensus that the cost of NTBs can be as much as three or four times greater than tariffs alone.

For instance, Karapeeva says, the opportunity cost to a plant of not being able to access a major market could be in the region of $500,000 a week.

Given the significant costs that can be imposed by NTBs, the meat industry is pleased the recently signed TPP agreement provides a useful framework to support good regulatory practices and includes specific measures to address NTBs.

“Over time, it is anticipated that the successful implementation of the TPP will lead to greater alignment of rules and requirements, so reducing the prevalence and burden of regulatory barriers to trade,” she says.

The TPP agreement includes a requirement that a country conducting audits of another country’s systems bears the costs of these audits, which should minimise the cost burden for New Zealand exporters.

“For example, the total cost of a recent routine systems audit by regulatory authorities from one of the TPP parties was nearly NZ$100,000 – a cost that currently has to be borne by the New Zealand government and industry, she says.

The TPP also bans consular transactions. This is another welcome provision, according to Karapeeva. It means documentation such as commercial invoices, certificates of origin and shippers’ export declarations, will not need to obtain consular invoices or consular visas.

“This is significant, as consular transactions are costly (ranging from $200 to $1,000 per consignment), time-consuming and unnecessary, particularly in the case of meat exports which are accompanied by official health certificates signed by the Ministry for Primary Industries.”

The successful negotiation of TPP was welcome news to the meat industry, but the agreement, of course, does not cover all of the markets to which the industry exports.

Impact of NTBs set out at RCEP

More recently, Karapeeva represented the industry as part of the stakeholder engagement programme during the latest Regional Comprehensive Economic Partnership (RCEP) negotiating round in Perth in April. RCEP includes the 10 ASEAN members plus six countries with which ASEAN has free trade agreements – Australia, China, India, Japan, Korea, and New Zealand.

Her presentation set out the impact of NTBs and outlined specific recommendations to address the key NTBs the New Zealand meat industry would like to see included in the RCEP agreement.

These include specific provisions similar to those included in the TPP agreement, and, at a more general level, equivalence arrangements that allow the industry to produce safe, high quality food under the New Zealand regulatory framework and for that to be recognised as achieving the regulatory objectives of New Zealand’s  importing partners.

There also needs to be a mechanism to deal in a timely manner with any issues that arise and robust enforcement and dispute settlement provisions that can be used as a last resort to help tackle NTBs.

“These proposed recommendations would create robust disciplines around NTBs, which would reduce costs and provide certainty for exporters, and therefore promote trade.” concludes Karapeeva.

This article appeared in Food NZ magazine (June/July 2016) and is reproduced here with permission.

 

 

 

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