30 Aug 2008

NZ reaches free trade deal with Asian nations

9:58 pm on 30 August 2008

New Zealand and Australia have signed a joint free trade deal with the 10 southeast Asian nations that is expected to reap significant economic benefits.

Trade Minister Phil Goff says the agreement includes the total elimination of tariffs on all key items of trade interest to New Zealand.

However, a trade union slammed the deal claiming it will benefit the Burmese junta.

The Maritime Union says the deal endorses Myanmar's appalling human rights record.

Its general secretary, Trevor Hanson, says workers in the country are often mistreated and abused.

And he is concerned the deal will bring short term, casual labour to New Zealand and drive down wages and conditions.

Key market

The ASEAN bloc was New Zealand's third-largest merchandise export market last year, worth $4.6 billion, having grown at 24% a year for each of the past three years.

New Zealand exporters currently pay about $50m annually in tariffs to the ASEAN countries.

The deal also covers trade in services, as well as investment and intellectual property issues between the signatory countries.

Fonterra's general manager of trade, Philip Turner, says the dairy industry had been angling for the elimination of tarriffs on dairy products.

"Southeast Asia is one of our key markets. It's worth $2.3 billion, it's a quarter of our dairy exports and we pay up to 10% on tarrifs," he says.

"We understand that the deal eliminates all of those tarrifs so that's excellent news for the country's dairy industry."

Mr Turner also says eliminating tariffs places the dairy industry in a strong position for future Free Trade Agreements with South Korea, India and Japan.

The Government hopes the agreement will be signed by the end of the year.