Overcoming barriers to trade

21 Dec 2016

pumpkin crates

Every two years a report is released setting out the barriers to horticultural exports out of New Zealand. In the latest report, released on 30 November, the following data is presented:

- Horticultural exports have increased 39.5% since 2014
- The total cost of tariffs has increased 5%
- The EU, Japan and Korea account for 51% of those tariffs

The importance of getting Free Trade Agreements (FTAs), particularly with the EU and Japan, and expanding the products included, such as apples, onions, pears, capsicums, and persimmons under the Korean FTA is self-evident. There is also a need under the China FTA to open that market up to avocados, onions, kiwiberry, and more. The New Zealand Government is working on all of these issues, and making reasonable progress; the biggest setback is the likely loss of the TPP, which would have opened up the Japanese market and resulted in tariff reductions worth nearly $30 million a year.

But the real issue facing horticultural exporters is the increase in non-tariff measures from when the last report was prepared in 2014. Global trends, like the Brexit vote and President elect Trump’s views on trade, strongly suggest that there may well be an increase in non-tariff barriers, and even an increase in tariffs. This would be disastrous for New Zealand horticultural exporters, and could see the current growth stifled. Our government needs to be particularly active in working to ensure that this tightening of trade barriers does not increase. Although this may appear to be an impossible task, it is one that needs full and urgent attention.

One area where there is a marked increase in barriers to export is agrichemical residues. Concerns about food safety is resulting in residue levels being decreased not only by Governments, but also by the major supermarket chains. New chemical compounds, biopesticides, and biocontrol agents are increasingly required, so that the ever decreasing residue levels can be satisfied. New Zealand has faced significant challenges in getting the registrations and approvals for the use of these controls from the relevant authorities. We are doing work to resolve these regulatory hurdles, but my fear is we will not get the changes we need in time to remain competitive with our exports.

Only time will tell.

 

-       Mike Chapman, CEO