Sunday, August 14, 2022

NZ-EU deal brings windfall to diverse sectors

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Zespri chair Bruce Cameron says the free trade agreement will deliver the kiwifruit industry $46 million in tariff savings.

While the traditional pastoral sector is lamenting the European Union-New Zealand free trade deal as a lost opportunity, a mix of next tier food exporters are thankful for the gains the agreement offers.

The kiwifruit, onions, wine and honey sectors mirror those that also celebrated gains coming out of the NZ-United Kingdom FTA, signed earlier this year, and now being ratified through Parliament.

Combined, the sectors represent $1.3 billion in food sales a year to Europe, with kiwifruit dominating with $1bn a year, followed by wine at $150 million. 

The combined sectors stand to save about $80m a year as soon as the agreement comes into effect.

The kiwifruit sector has been a major beneficiary of a series of FTAs signed in the past decade, kicking off with the NZ-China FTA in 2008. That has contributed to China now being one of the top three kiwifruit export markets. 

This was followed by FTAs signed with Taiwan (2013) and South Korea (2015), and today all three countries are in NZ’s top five export destinations. 

Zespri chair Bruce Cameron said the latest FTA with the EU represents about $46.5m in tariff payments that will no longer be coming off growers’ export revenue. 

Read: Dairy industry dismayed at EU FTA

The EU accounts for about 26% of the industry’s market sales, and dropping the tariff could add almost $1 a tray in revenue from fruit sold in that market.

Cameron described the agreement as a “strong deal” for a wide range of exporters – and one that sets Zespri up well to expand exports into Europe.

Spain, among the world’s largest importers of kiwifruit, has proven a particularly strong growth market for NZ kiwifruit in the past few years. 

NZ also has close ties to European growers, with Zespri having longstanding growing partnerships with orchardists throughout France, Italy and, more recently, Greece.

Significant investment in joint biosecurity initiatives and research has also helped expand NZ’s ability to manage the risk of major pest incursions, in particular the brown marmorated stink bug, which is rife in Italy.

The wine industry is also celebrating the EU win, with that market’s $150m in sales over the past 12 months accounting for almost 10% of the sector’s entire export income.

The current tariff on wine – NZ’s fifth most significant export to the EU – is 5%.

Also read: Big exporters say EU FTA doesn’t shift the dial

NZ Winegrowers CEO Philip Gregan said the agreement will also reduce compliance burdens such as certification and labelling requirements, and will support future growth in Europe.

“The EU’s complex rules can make market access difficult for winegrowers so it is encouraging to see some easing of restrictions in this area,” said Gregan.

As is the case with mānuka honey and kiwifruit, tariffs on NZ wine are to be lifted as soon as the deal is ratified. Estimates are the sector will save $5m a year immediately.

Winegrowers will, however, have to come up with new names for “port” and “sherry”, with a quid pro quo protection on these reflected in the EU recognising “Marlborough”, “Central Otago” and “Hawke’s Bay” as distinct regions here.

A Winegrowers spokesperson said NZ’s exports of sherry and port are low, at less than 1,000L a year.

With $50m in sales a year, the EU is also NZ’s main onion export market. The sector is expected to save $6m in tariffs.

The move puts NZ on a level footing with competing countries including Chile and South Africa, said Onions NZ CEO James Kuperus.

Honey producers estimate the sector will claw back $17m in tariffs, particularly from the high value mānuka sector (see accompanying article).

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