Sector outcomes
Dairy
Dairy has an export value of NZ$363 million (average over 2004-2006) and amounts to 18 percent of New Zealand's total exports to China. Tariffs on products including infant milk formula, casein, yoghurt and whey will be phased out over five or six years.
A longer phase-out period applies to certain "sensitive" dairy products:
- Tariffs on cheese, butter and liquid milk will be phased out over 10 years.
- Tariffs on whole and skim milk powders will be phased out over 12 years.
China will have some additional protections for its developing dairy industry:
Dairy special safeguard mechanism
China may apply a temporary special safeguard mechanism during the phase-out period of tariffs on some dairy products.
The safeguard allows China to apply an additional tariff (up to China's WTO tariff level) for one year to imports for specified products that are above an agreed quantify trigger level. The trigger level will increase by 5% per year.
The special safeguard mechanism is available during the tariff phase-out period and for a further five years after tariffs have been eliminated.
For example, if imports of cheese from New Zealand to China exceed the 2009 quantity trigger level, China may impose an additional tariff to cheese imported in that year over and above the trigger level.
Mid-term review mechanism for milk powders
The NZ-China FTA also includes a mid-term review mechanism for whole and skim milk powders. Following the Year 6 tariff cut (in 2013), the Trade in Goods Committee will carry out a review cut to see whether increased dairy imports from New Zealand have caused an overall negative impact on the Chinese dairy industry.
If the Committee finds that New Zealand dairy imports have had an overall negative impact on the Chinese dairy industry, the next tariff cut for whole and skim milk powders may be postponed by one year.
The postponement can only be made if both New Zealand and China agree to it. The tariff cut on milk powders can only be postponed if the review shows a causal link between the negative effect on the Chinese dairy industry, tariff reductions and increased New Zealand imports.
Wool
Wool has an export value of NZ$167.1 million (average over 2004-2006) and represents 8 % of New Zealand's current exports to China. The NZ-China FTA creates a country-specific tariff quota (CSTQ) for New Zealand wool exports to China. The CSTQ will provide duty free treatment for an initial quantity of 25,000 tonnes. This initial quantity will grow by 5% annually through to a cap of 36,900 tonnes in 2017. This represents 75 percent of current wool exports to China. For wool tops the initial CSTQ level of 450 tonnes is equivalent to 120 percent of New Zealand's current exports. It also increases by 5% per year over eight years to a level of 665 tonnes. Any increases beyond that date will be by mutual agreement between the two countries.
New Zealand exporters will also still be able to
access to China's existing WTO quota for wool.
Wood and paper products
Most of New Zealand's current forestry exports (logs, sawn timber and wood pulp) already enter China duty free. The NZ-China FTA ensures that these products remain duty-free.
There will be no tariff reduction under the NZ-China FTA for some processed wood products and paper products exported to China. In total, these products account for 4% of New Zealand's current exports to China.
China has however agreed to give to New Zealand any preferential treatment that it offers to any other country, so New Zealand exporters will not be at a competitive disadvantage in relation other suppliers to China.
Other key export areas
Raw hides and skins
This category has an export value of NZ$110.8 million (average over 2004-2006) and amounts to 6% of New Zealand's total exports to China. Most products are in the category for tariff elimination over five years. Those products that currently have a tariff of 5% or less will become duty-free on entry into force of the FTA. Tariffs on some products (sheep and goat skins) will be phased out over nine years.
Other food preparations
This category has an export value of NZ$93.3million (average over 2004-2006) and amounts to 5% of New Zealand's total exports to China. Except for those products included in China's sensitive category (described above) for elimination over nine years, tariffs on most of these products will be eliminated over five or six years.
Fish and other seafood
This category has an export value of NZ$90.1million (average over 2004-2006) and amounts to 4% of New Zealand's total exports to China. Other than for products such as live fish fry and shellfish for cultivation, most of which are already duty-free, tariffs on these products will be eliminated over five years.
Animal or vegetable fats and oils
This category has an export value of NZ$64.8 million (average over 2004-2006) and amounts to 3% of New Zealand's total exports to China. Most tariffs on these products will be eliminated over five years.
Imports to New Zealand
The FTA provides China with improved access to the New Zealand market but at the same time provides time for New Zealand's sensitive sectors to adjust to tariff reductions. 37% of China's imports to New Zealand already enter China duty-free.
The FTA tariff cuts are broadly consistent with phase outs under other FTAs. New Zealand is currently implementing a unilateral programme of tariff cuts through to July 2009 and during this period, the tariffs under the FTA in 'sensitive' product areas will not, in the majority of cases, be lower than the tariff under the unilateral tariff cuts. However, all of China's exports to New Zealand will eventually be duty-free. Specific outcomes include:
- Tariffs on the most highly traded clothing and footwear products and some textile products will be phased out on a linear basis by 2016.
- Tariffs on carpet, the remaining clothing, footwear products and certain highly traded textile products will be phased out on a linear basis by 2014.
- The FTA provides for phase outs for tariffs in the range 6-12.5 percent by 2012. This includes products such as whiteware, steel, plastics and furniture.
Some less sensitive textile and clothing products are also included in this category. New Zealand has retained a slower initial tariff phase-out profile for particular steel and whiteware products to ensure that tariff reductions under the FTA go no faster than under the unilateral tariff reduction programme through to 2009.
- Page last updated: 27 August 2008
