Rotorua Daily Post: Free Trade brings benefits locally
Trade is important to New Zealand’s economy. We rely on selling goods high quality and services to the rest of the world to get ahead. In fact exports and imports account for around 60 per cent of New Zealand’s economic activity.
Any trade preferences through reduction in duty rates the Government can secure through FTAs means money in pockets of New Zealanders. It means businesses can be more competitive and more productive, allowing them to expand and create more jobs.
That’s why the Government has had a strong focus on concluding and negotiating new Free Trade Agreements with some of the world’s largest economies this year. It’s been a big year for New Zealand in this area.
In March we concluded a deal with Korea, the world’s 13th largest economy and home to over 50 million people, which will see tariffs reduce over the next 15 years - saving $229 million for our exporters.
Locally, the deal with Korea has great benefits for industries that are important to us. Korea represents a large amount of the export markets for two of our significant local employers, the forestry and kiwifruit industries.
$503.1 million worth of forestry products were exported to Korea last year, attracting hefty tariffs before being able to enter Korea. Over the next 10 years, 99 per cent of these will be removed, meaning reduced costs for local businesses.
The Korea FTA also results in large savings for the kiwifruit growers in the Bay of Plenty, with tariffs being reduced from 45% to zero over the next five years. The saving for local growers will be significant, expected to be around $8,500 per grower as a result of reductions in tariffs.
In addition to the FTA with Korea, the Trans-Pacific Partnership was signed by 12 countries, totalling 36% of the world’s economy. TPP will continue level the playing field for local exporters, with over 800 million more consumers now more accessible for New Zealand companies exporting overseas. The deal sees us secure tariff free entry for our products into the world’s largest and third largest economy, the United States and Japan respectively, saving $259 million per year.
TPP is another big win for local industries, which will see more costs to their businesses reduced significantly. One of the big winners is a big part of our agriculture industry that is currently leading the way – our meat exports, and especially sheep and beef.
New Zealand farmers exported $2.3 billion worth of sheep, beef, processed meats and offal to the TPP region in 2014 – all of which attracted tariffs of $72 million. Savings for the sheep and beef industry thanks to TPP are expected to be around $59.8 million for beef farmers, and $2.6 million for sheep farmers – all of which goes back into our economy by farmers being able to grow their business and employ more people.
Free Trade Agreements create a great opportunity for Rotorua, the Bay of Plenty, and New Zealand. FTAs mean that exporters no longer have to pay massive tariffs for their products to enter some of our biggest markets. FTAs also open the door for more trade, as our high quality goods are now cheaper for consumers in TPP countries to buy and consume.
This means more and better paying jobs thanks to increasing our markets, reduced costs, and more productive businesses.