China FTA Delivering Tariff Savings

NEW ZEALAND - The China FTA with New Zealand is delivering annual tariff savings of nearly $25 million a year to New Zealand sheep and beef farmers and the amount is set to grow as tariffs continue to reduce and export volumes grow, say Beef + Lamb New Zealand (B+LNZ).
calendar icon 9 August 2011
clock icon 3 minute read

B+LNZ Chief Executive Officer, Dr Scott Champion said in the 2010 year New Zealand’s trade with China included nearly $700 million worth of sheep and beef products.

“Those volumes are trending upwards as China continues to develop rapidly, with a growing middle class population looking to increase protein consumption, and that includes our beef and lamb.

“The number of consumers considered to be wealthy from a global perspective is growing significantly and this is driving increased consumption of imported food products.”

It was B+LNZ that represented New Zealand sheep and beef farmer interests alongside government when the FTA was being negotiated.

China is New Zealand’s second largest sheepmeat market by volume, importing 29,800 tonnes. New Zealand’s total sheepmeat exports are 355,000 tonnes with 72,600 tonnes going to the UK and 25,100 tonnes going to the US.

“Crucially, the Chinese market is looking for quite a different product mix compared to our traditional sheepmeat markets such as the UK and US which take the higher value cuts like lamb legs and French racks.”

China is a key market for sheep flaps which are used in the traditional Chinese ‘hotpot’ dishes. It’s also a key market for co-products like fats and oils and animal casings. This trade was worth $170 million last year and the China FTA provided estimated tariff savings of almost $12 million on co-products alone. It underlies the importance of co-products and their contribution to the value of annual exports.

The FTA also provides for a country-specific tariff quota of 27,563 tonnes of clean wool to be imported from New Zealand in 2011 and this will increase by five per cent each year until 2017 creating an eventual country-specific tariff quota of almost 37,000 tonnes.

Dr Champion said it’s likely the China FTA will deliver another $21 million by the time the tariffs are fully eliminated in 2016.

Tariff savings on key products from the sheep and beef sector are shown below:-

Product Trade 2010 (NZ$ millions) FTA tariff rate (2010) Tariff rate prior to FTA Tariff saving 2010 (NZ$ millions) Duty free access achieved by
Beef 9.2 8%-16.7% 12%-25% 0.4 2016
Sheep meat 119.7 8%-15-3% 12%-23% 4.8 2016
Edible Offals 5.8 4.8%-13.3% 12%-20% 0.4 2016
Fats & Casings 170.1 3.2%-8% 8%-20% 11.6 2012
Meat meal 0.8 0%-6% 2%-15% 0.02 2008
Hides & Skins 95.2 0%-9.3% 5%-14% 4.7 2016
Wool 286.6 0%* 1%* 2.9 Quota access*
Total 687.4 - - 24.82 -

* China operates separate tariff rate quotas for wool fibre and wool tops. New Zealand gained a tariff free country specific quota for wool fibre of 27,563 tonnes in 2011 under the NZ-China FTA. New Zealand can also access a wool fibre quota open to all countries of 287,000 tonnes.

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