DCANZ executive director Kimberly Crewther is urging the new government not to let New Zealand rest on its laurels when it comes to further trade liberalisation in the dairy global export market.
There needs to be ongoing investment in maintaining momentum, she said, speaking in a webinar following the launch of a report by Sense Partners commissioned by DairyNZ and DCANZ (Dairy Companies Association of New Zealand).
That report, Solid Foundations – Dairy’s economic contribution to NZ, highlights the significant trade barriers NZ’s dairy industry faces in getting its product to market.
The next government will need to take a multipronged approach to address this, including maintaining and investing in new and existing trade relationships.
“Be ambitious, because an end point of tariff elimination is where we need to get to in those agreements,” Crewther said.
Recent news of progress towards an agreement with the United Arab Emirates means possible access to a $600m market.
“We’re paying around $35m in tariffs there – it’s only a small tariff, but that adds up,” she said.
The more incremental gains that can be made by extending trade, the better, Crewther said.
India and the United States are significant gaps in the market for NZ dairy products. Current trade is limited to a narrow range of products and being able to lift some of the barriers and broaden access would give exporters more options.
There is also a degree of “unfinished business” in some existing trade agreements, such as those involving Japan and the European Union.
“Those agreements all have upgrade provisions over time and it’s important that we be ambitious in what we are seeking for those upgrades,” Crewther said.
“Those are developed markets, developed countries and G7 countries, and the United Kingdom agreement showed that it’s no longer a defence for G7 countries to say they can no longer liberalise their dairy market.”
NZ also needs to use the mechanisms in the agreements to make sure they improve over time.
“For that eye-watering $7.8 billion of non-tariff barriers, we have got trade agreement structures that have mechanisms to be able to advance discussions around bringing those down, so let’s make sure that we’re actively using those mechanisms.”
Reducing them would support exporters to continue to grow the export value of NZ dairy products.
“Sense Partners estimates that New Zealand dairy exports continue to incur more than $1.5bn of tariffs and $7.8bn of non-tariff-measures costs,” Crewther said.
Around 56% of global dairy consumption takes place behind average tariff barriers of 20%, Sense Partners’ John Ballingall said.
“An even larger share – around 87% – takes place behind tariff barriers that average 10% or more.”
Ongoing investment by the government leading to small decreases in trade barriers would support the industry’s export competitiveness.
This would lead to a wider choice for the dairy sector in terms of where it can export its products to, and would reduce its reliance in individual countries.
Ballingall called India a “very big prize”, because of its population size and the extent of its trade barriers.
But it is a tough market to crack and needs to be seen as a long-term play. The recent trade delegation to India was encouraging, he said.
“It’s a market we can’t afford not to be in even if it may take some time.”