New Zealand’s recent free trade agreement (FTA) with the European Union (EU) has opened up new opportunities for Kiwi exporters, particularly in the dairy industry. With tariffs on the majority of New Zealand’s goods exports to the EU being eliminated, the agreement is set to benefit the country’s economy substantially. Let’s delve deeper into the implications of this landmark deal and how it is expected to reshape the dairy trade landscape for New Zealand.
A Game-Changer for New Zealand Exporters
With 91% of New Zealand’s goods exports to the EU now enjoying duty-free access, the FTA marks a significant milestone for the country’s trade relations with one of its major partners. Over time, this percentage is set to increase to 97%, providing even greater market access for New Zealand exporters. Notably, dairy and meat products will also see improvements in terms of quota volumes and reduced in-quota tariff rates.
- Tariff Elimination: New Zealand exporters are projected to save around NZ$100 million per year solely from tariff elimination, with substantial savings kicking in from the agreement’s commencement.
- Market Access: The FTA will enhance market access for New Zealand exporters, aligning with the government’s target of doubling exports by value within a decade.
Impact on the EU Agricultural Sector
While the FTA presents significant advantages for both parties, certain EU agricultural products, such as dairy and beef, remain safeguarded through carefully designed tariff rate quotas. For the EU, exports to New Zealand are expected to witness substantial growth, with investments potentially increasing by up to 80%. However, not all stakeholders view the trade deal positively, as evidenced by concerns raised by industry players like Fonterra.
- Sensitive EU Products: Sensitive agricultural products in the EU, including dairy products, continue to be shielded to some extent, reflecting the protectionist stance taken by the EU dairy industry.
- Industry Concerns: Fonterra’s disappointment with the dairy outcomes underlines the challenges faced by New Zealand dairy exporters despite the overall benefits of the FTA.
Dairy Product Specifics
The FTA brings about notable changes in the dairy trade dynamics between New Zealand and the EU, particularly in the cheese, butter, milk powder, and processed dairy protein segments. These modifications offer Kiwi dairy exporters greater access to the EU market through revised quotas and tariff rates.
- Cheese and Butter: New Zealand’s exports of cheese and butter to the EU are set to benefit from increased tariff rate quotas and reduced in-quota tariffs, opening up new opportunities for growth in these segments.
- Milk Powder: Previously lacking preferential access to the EU market, New Zealand will now have fixed quotas for milk powder exports, facilitating increased trade volumes in this category.
- Processed Dairy Proteins: The FTA enables New Zealand to export dairy processed animal proteins and high-protein whey to the EU duty-free, allowing for the expansion of product offerings in these niches.
Looking Ahead
As New Zealand and the EU navigate the implications of the FTA, both parties stand to gain from enhanced trade relations and increased market access in various sectors, including dairy. For New Zealand, the agreement signifies a step towards achieving its ambitious export growth targets and further solidifying its position in the global dairy market.
In conclusion, the New Zealand-EU FTA represents a significant milestone in the economic landscape of both regions, offering new possibilities for collaboration and growth across various industries, with dairy playing a pivotal role in reshaping trade dynamics. As stakeholders adapt to the changes brought about by the agreement, the dairy sector stands poised for transformation and expansion in the evolving global trade environment.
