If you missed it over the holiday period, there were two important trade developments last month - one opening a potential long-term opportunity, the other providing certainty in an important existing market.
India
The Government’s announcement that Free Trade Agreement (FTA) negotiations with India have concluded is a significant step forward.
B+LNZ and the Meat Industry Association worked closely with the Ministry of Foreign Affairs and Trade (MFAT) to ensure the red meat sector’s interests were well understood, with a strong focus on achieving a comprehensive and commercially meaningful agreement for the sector’s key products, especially sheepmeat.
India is a challenging market with high tariffs and non-tariff barriers that limit trade.
Once in place the FTA will reduce many of these, including the 33 percent sheepmeat tariff, which goes to zero. The FTA provides a legal framework to potentially deal with the barriers that restrict trade and puts us on a level playing field with Australia who already has a trade deal.
India’s economy is growing quickly and is expected to become the world’s third largest within the next five years.
By 2030, it is projected to include an additional 140 million middle-class households. While this is a long-term opportunity rather than an overnight win, demand for high-quality protein is increasing and domestic production is not expected to meet all future demand.
Beyond sheepmeat, India also presents opportunities for co-products such as pharmaceuticals, wool and pet food - areas where tariff and non-tariff barriers will be important to address.
Given the fragile global system, new access through the India FTA is a strategic opportunity that builds resilience for New Zealand’s red meat exports.
It has taken nearly 20 years to conclude this negotiation, and we would like to see it passed by our respective Parliaments. As with some of our other FTAs, it will be possible to negotiate improvements in the future.
We want to acknowledge the hard work of Trade and Investment Minister Todd McClay and officials to successfully conclude the negotiations.
China
Separately, China has confirmed it will introduce a global safeguard quota on beef imports from this month following an investigation into beef imports.
Under the new arrangements, New Zealand will have a country-specific zero-tariff quota of 206,000 tonnes, rising to 214,000 tonnes by 2028, for a three-year period.
Between 2019 and 2024, New Zealand’s beef exports to China averaged around 193,000 tonnes per year, meaning the quota should allow current trade to continue largely unaffected. Beef exported above the quota would face a 55 per cent tariff, making significant growth above that level unlikely during the safeguard period.
While we maintain that New Zealand beef does not cause injury to China’s domestic industry and so a measure is not necessary, the outcome does protect our existing trade.
While we are aware that other countries are looking to allocate their own country-specific quotas, it is not a straightforward exercise and requires careful consideration of the policy and regulatory effects, as well as wide consultation of exporters to China. Engagement with New Zealand government officials will also be required.
As with the India FTA, B+LNZ and MIA worked closely with MFAT, MPI and Minister McClay to advocate for a fair outcome that minimised trade disruption.
Many New Zealand officials worked over the Christmas, New Year holiday period to engage with China in the final stages of this process and their efforts are appreciated.
We will continue to keep you informed if there are any further developments.