Meat industry ‘delighted’: TPP eliminates tariffs for sheepmeat in 11 markets

Tariffs for sheepmeat, and to a lesser extent beef, are to be eliminated in the newly minted Trans-Pacific Partnership (TPP), which was signed overnight in Atlanta bringing into force New Zealand’s biggest free trade agreement (FTA) spanning 12 countries. 

Tim Groser“TPP breaks new ground for us. It is our first FTA relationship with the US – the world’s biggest consumer market – as well as Japan, Canada, Mexico and Peru,” says Minister for Trade Tim Groser.

“As a result New Zealand will now have FTAs covering our  top five trading partners – Australia, China, the US, Japan and Korea.”

Previous FTAs, including with China, have been positive for New Zealand trade and investment and in supporting jobs and growth for New Zealanders, he says. “Not being in TPP, on the other hand, would put New Zealand at a competitive disadvantage compared to other countries.”

Tariffs will be eliminated on 93 percent of New Zealand’s trade with its new FTA partners, once TPP is fully phased in. This will ultimately represent $259 million of tariff savings a year – around twice the savings initially forecast for the China FTA.

Of the $20 billion of New Zealand’s exported goods to the TPP members, meat accounts for $2.7 billion a year. The TPP agreement means that tariffs on New Zealand sheepmeat to all 11 TPP countries will be eliminated. Tariffs on beef exports to TPP countries will also be eliminated, however, with the exception of Japan where tariffs reduce from 38.5 percent to nine percent.

TPP also reduces non-barriers to trade, ensures fair access for New Zealand firms doing business in TPP countries and provides greater opportunities to bid for government procurement contracts overseas.

B+LNZ/MIA ‘delighted’

Beef + Lamb New Zealand (B+LNZ) and the Meat Industry Association (MIA) are delighted by the news.

James Parsons“We’re confident that New Zealand’s negotiators have secured the best possible deal for Kiwi sheep and beef farmers,” says B+LNZ chairman James Parsons.

“The TPP will have a significant impact on the competitiveness of our exports in TPP markets.”

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.

Bill Falconer2“New Zealand doesn’t currently have FTAs with Japan, the US, Canada, Mexico or Peru,” notes MIA chairman Bill Falconer. “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.

“The TPP will also open the door to addressing some complex and costly non-tariff barriers.”

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.

The high quality TPP assumed even more importance for the New Zealand meat sector, following April’s conclusion of an economic partnership agreement between Australia and Japan.

PM welcomes TPP 

Prime Minister John KeyWelcoming the successful conclusion of the negotiations, Prime Minister John Key says: “This agreement will give our exporters much better access to a market of more than 800 million customers in 11 countries across Asia and the Pacific and help Kiwi firms do business overseas.

“In particular, TPP represents New Zealand’s first FTA relationship with the largest and third-largest economies in the world  the US and Japan, Successive New Zealand governments have been working to achieve this for 25 years.”

TPP will eliminate tariffs on 93 percent of New Zealand’s exports to new FTA partners, the US, Japan, Canada and Mexico.

Dairy exporters will have access to these markets through newly created quotas, in addition to tariff elimination on a number of products, he noted. Tariffs on all other New Zealand exports to TPP countries will be eliminated, apart from beef exports to Japan, where tariffs will reduce significantly.

“The overall benefit of TPP to New Zealand is estimated to be at least $2.7 billion a year by 2030,” Key notes.

Groser says New Zealand supports the release of the text before it is signed by TPP governments but arrangements are yet to be finalised.

“TPP, like any trade agreement, will go through New Zealand’s Parliamentary processes. We expect it to come into force within two years.”

TPP members include Brunei, Chile, Singapore, New Zealand, Australia, Canada, Japan, Mexico, Peru, the US, Vietnam and Malaysia. The agreement is New Zealand’s first with five countries, including the world’s first and third largest economies, the US and Japan, plus Canada, Mexico and Peru. New Zealand’s exports of goods and services to these five countries are worth over $12 billion a year.

The conclusion of the TPP follows recent trade agreements with Korea, Chinese Taipei, Hong Kong, ASEAN/Australia and Malaysia. The Government is continuing negotiations with a number of other countires and is actively pursuing the launch of an FTA with the European Union.



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