CPTPP is now a reality for NZ red meat sector

Six countries have now ratified the Comprehensive and Progressive Trans-Pacific Partnership free trade agreement bringing certainty, a sense of relief and lower tariffs, for the red meat sector, especially beef producers and exporters.

Australia joined the other five countries – Singapore, Mexico, Japan, New Zealand and Canada – to have ratified the Comprehensive and Progressive Trans-Pacific Partnership today, bringing the total to the required six countries which triggers the 11-country trade deal coming into force for those nations on 30 December this year.

David Parker
David Parker, Minister for Trade.

“This triggers the 60-day countdown to entry into force of the Agreement and the first round of tariff cuts,” explains Minister of Trade and Export Growth David Parker.

The remaining countries yet to ratify are Brunei Darussalam, Chile, Malaysia, Peru and Vietnam.

New Zealand beef producers will benefit most from the trade deal, alongside kiwifruit and wine producers, along with smaller agribusinesses such as those producing mussels and cherries, notes Minister of Agriculture Damien O’Connor.

“The CPTPP will, for the first time, provide us with preferential access to the world’s third largest economy, Japan, as well as fellow G20 members Canada and Mexico,” says O’Connor.

“It places our primary sectors on equal footing with exporters from other countries with lower tariffs in these markets. CPTPP will immediately remove Australian beef exporters’ current tariff advantage over New Zealand in the Japanese market. This has been costing our red meat sector millions in potential revenue.”

Red meat sector welcomes news CPTPP will enter into force this year

The red meat sector has also welcomed the day’s big news.

Sam McIvor
Sam McIvor.

“This timing means the sector will benefit from two rounds of tariff cuts in quick succession from all member countries, with the exception of Japan. The first tariff cut will be upon entry into force of the agreement on 30 December and the second round of cuts on 1 January 2019. Japan’s second round of tariff cuts will be on 1 April 2019,” says Beef + Lamb New Zealand’s (B+LNZ) chief executive Sam McIvor says.

“This agreement is of great importance to the sector, especially for the Japanese market where we have lost significant market share due to Australia’s preferential access under their bilateral free trade agreement with Japan. The CPTPP will put us on a level playing field and save the sector approximately $63 million in tariffs into Japan once the agreement is fully implemented,” says McIvor.

Meat Industry Association (MIA) chief executive Tim Ritchie says there are a number of other countries who have expressed an interest in joining the agreement such as the United Kingdom, Taiwan, and South Korea.

“This not only highlights the economic significance of the CPTPP but also the importance of the rules -based trading system and trade liberalisation to these countries. This is particularly important in the current climate of growing protectionism.

Tim Ritchie
Tim Ritchie.

“The red meat sector fully supports the accession of other countries to the agreement where they are committed to high quality, comprehensive outcomes,” says Ritchie.

McIvor and Ritchie say the red meat sector thanks both the previous and current governments and officials on the significant work they have undertaken to bring the agreement into force – but also to keep the agreement alive during some difficult challenges, especially the withdrawal of the US in early 2017.

“We believe this is a massive step towards reinforcing the importance of trade liberalisation and the sector will continue to support the government’s efforts in this space.”

Japan’s 38.5 percent tariff on beef exports will reduce to nine percent over 16 years, one of the lowest tariffs offered by the country. In addition, the country’s tariffs on offal and processed meats will be eliminated over 11-13 years with a 50 percent reduction at entry into force.

Beef + Lamb NZ and the Meat Industry Association had calculated CPTPP would save New Zealand meat exporters around $63 million a year in tariffs into Japan and also contains ways to address complex non-tariff barriers, which can be costlier than tariffs and more difficult to quantify.

Canada is currently New Zealand’s twelfth-largest export market worth over $1 billion in 2017, notes Parker.

For Canada, all tariffs and quotas on New Zealand beef will be eliminated over six years, allowing unrestricted duty-free access, but there will be immediate duty-free access for wine, processed meats, wool, forestry and fisheries products. Tariffs on processed meats will be eliminated at entry into force for lines of trade interest.

“Canada and New Zealand share a commitment to ensuring the benefits of trade and investment are broadly shared and we will be working together within the CPTPP grouping to achieve this,” Parker says, adding having such a close partner as Australia among the first six to give effect to the CPTPP is positive for New Zealand.

Damien O'Connor
Damien O’Connor

Tariffs on New Zealand’s beef exports to Mexico will also be phased out, says O’Connor.

“Exporters now have the opportunity to diversify the range of products they supply and focus on producing higher-value products that see our farmers and growers get more from what they do now,” he says.

“This supports thriving sustainable regions that drive productive economic growth to the benefit of all New Zealanders.”

Reciprocal side letters alongside CPTPP have been signed by New Zealand and Australia, which excludes the use of investor state dispute settlement (ISDS) between the two countries. Reciprocal side letters on ISDS are also in place with Peru, Malaysia, Vietnam and Brunei.

 

 

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