WINE
WIN
New Zealand winegrowers
are warmly welcoming the
news that the 11 nations
negotiating the CPTPP
have completed talks and
are set to sign the agreement
in Chile. “This is very
good news for the 20,000
people in our regions
whose livelihoods depend
on the wine sector,” New
Zealand Winegrowers chief
executive Philip Gregan
says. New Zealand’s wine
exports to CPTPP countries
were valued at $515m in the
year ended June 2017, and
Gregan says the agreement
will immediately begin to
make products more competitive
in countries such as
Canada, Japan and Malaysia
by reducing import tariffs.
“That’s a win that’s ultimately
worth several million
dollars a year,” he says.
Importantly, the signing of
the agreement will attract
increased investment and
trade between the signatory
countries. “It’s like the
government’s put up a shiny
new ‘open for business’
sign, so people look afresh
at doing business with those
economies.”
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The CPTTP is the re-negotiated
Trans Pacific Partnership after
the USA withdrew, and is
a free trade agreement between
Australia, Brunei, Canada, Chile,
Japan, Malaysia, Mexico, New Zealand,
Peru, Singapore and Vietnam. Negotiations
have concluded between the
countries, but it is yet to be ratified by
New Zealand. The TTP had met some
public and political opposition, but the
CPTTP could change the sector from
relying on low cost commodities to
focus on high value exports intimately
connected to a pristine environment.
Where New Zealand producers are
exporting high value branded products,
we see an associated increase
in concern for the environment. These
producers know that they need to meet
consumer demand for products to be
produced ethically and sustainably.
Tariffs on New Zealand beef exports
to Japan will drop from 38.5% to
9%, saving the industry $25 million.
This reduction in tariffs will give New
Zealand and Australia a competitive
advantage over USA beef in the high
value Japanese market. It will encourage
New Zealand beef farmers to target
high value beef cuts in the Japanese
market rather than export commodity
hamburger beef to the USA. Tariffs on
DAIRY DOUBTS
Dairy companies are pleased to see the deal done, but are disappointed at the terms of dairy access. Dairy Companies
Association of New Zealand chairman Malcolm Bailey says there are useful gains in markets such as Japan and
Mexico. “CPTPP market access outcomes are also critical to avoid New Zealand dairy exporters ending up at a
tariff disadvantage in key markets, including Japan,” he says. During the past year, there have been some big trade
developments in the trans-Pacific region, including the conclusion of FTA negotiations between Japan and the EU.
“The EU and Mexico are also looking to upgrade their existing FTA,” Bailey says. “Both are key markets for New
Zealand dairy exports, with the Japanese market worth more than $795 million for New Zealand dairy exporters in the
year to November 2017. It is clear that New Zealand is continuing to play a strong leadership role on trade issues and,
longer-term, it is important for CPTPP to be a launch pad for the elimination of all remaining barriers to regional dairy
trade, he says.
MEATY SUPPORT
kiwifruit exports to Japan, the largest
importer of New Zealand kiwifruit, will
be eliminated; tariffs on wine exports
to New Zealand’s fourth largest market
Canada will also be removed. Overall
the CPTPP could provide approximately
$222m of tariff savings each year. However,
the public needs to be convinced
of these benefits. There is suspicion
that benefits of the agreement will not
be shared equally across the economy
and many will see it as only benefitting
already wealthy farmers who are damaging
the environment. For the public
to get behind such a deal, New Zealand
agriculture needs to demonstrate that
increased agricultural production won’t
have further impacts on the environment
and will have benefits to all New
Zealanders. In fact, the greatest benefit
will be to the regions and to agricultural
industries that are already addressing
their environmental footprint. Good
examples are the wine and kiwifruit
industries. They are committed to
minimising their environmental impact
not because of regulations, but because
they market high value branded products
and their customers demand that
these products are produced sustainably.
This is in contrast to sectors such
as the dairy industry which export
primarily commodity products that are
used in ingredients. As a result, few
retail customers are aware that New
Zealand milk products are present in the
final product and there is little market
incentive for dairy farmers to respond
to customers or the general public’s
concerns over how the product is produced.
There is no significant premium
for New Zealand commodity dairy
exports, therefore farmers perceive
reducing the environmental impact of
their farming practices as a cost rather
than a market advantage. The answer
to ensuring that improvement in market
access for our agricultural products
truly benefits all New Zealanders is for
the agricultural sector to move away
from commodities to producing high
value branded exports. This will provide
incentives for farmers to meet higher
environmental standards, not reluctantly
as a result of public pressure and
regulations but because it gives them
a market advantage. If the public can
be convinced that the benefits to the
agricultural sector can contribute to
improving the current environmental
challenges as well as regional economic
growth, the CPTPP can be seen not
only as a win for global collaboration but
a win for all New Zealanders.
The conclusion of the agreement represents good news for sheep and beef farmers and all New Zealanders,
Beef + Lamb New Zealand (B+LNZ) and the Meat Industry Association (MIA) say. B+LNZ chief
executive Sam McIvor says the agreement will benefit communities around New Zealand, as exports
from the red meat sector support 80,000 jobs and families. “The sector understands there have been no
changes to the original market access conditions which will open multiple markets in Japan, Mexico,
Peru and Canada where New Zealand red meat faces tariffs of up to 50%.” Meat Industry Association
chief executive Tim Ritchie says the agreement will put New Zealand on a level playing field with other
major red meat exporters to the Asia Pacific region, such as Australia and the EU, and “especially in
Japan where the sector has already lost significant market share.”
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