22 Mar 2015

Long awaited Korea trade deal gets sign-off

8:21 pm on 22 March 2015

A free trade deal between New Zealand and Korea will be signed and sealed in Seoul today - an agreement that has been tough to negotiate and has taken five years to conclude.

Trade Minister Tim Groser said it was a massive relief to sign off on the deal, which would eventually save New Zealand producers $229 million a year in tariffs.

Gold kiwifruit grown under licence for Zespri on Jeju Island, Korea.

Gold kiwifruit grown under licence for Zespri on Jeju Island, Korea. Photo: RNZ / Jane Patterson

Korea is New Zealand's sixth largest export market, with about $4 billion of two-way trade.

At the moment, New Zealand kiwifruit growers pay a 45 percent tariff for Korean exports, which will be phased out within the next five years.

New Zealand Kiwifruit Growers president Neil Trebilco said the tariff - worth $20 million last year - created several problems for growers.

"It means that growers don't bring back as much money into New Zealand. But also our market share has gone down because the Chileans, who are our main competitors, have been exporting to there and they have a free trade agreement."

Mr Groser said other exporters across several sectors struggled to get a foothold in the crowded Korean market.

"It's been an enormous relief to some of our exporters to get this thing done," he said.

Mr Groser said it was not a perfect agreement, as there were things the Government would have liked to have seen achieved in it, but they were playing a massive game of catch-up.

Deer market 'sensitive'

He said one product that was not covered by the deal was unprocessed deer velvet, which made up three quarters of New Zealand's $20 million antler trade with Korea.

The dairy section at a supermarket in Seoul.

The dairy section at a supermarket in Seoul. Photo: RNZ / Jane Patterson

"It's very interesting this deer velvet thing, which as far as I know is an aphrodisiac," Mr Groser said

"This was the most difficult issue to resolve in the Taiwan agreement. We did achieve elimination there, but over a very long period of time."

"These Asian markets are deeply sensitive about this," he said.

Deer Industry New Zealand chief executive Dan Coup said an aphrodisiac was just one of the uses of deer velvet, and it was a big seller in Korea.

He said it also had an appeal as a medicine in immune function and joints.

Under the deal, tariffs on processed deer velvet would be reduced over 15 years. Mr Coup said fierce resistance from Korean producers meant unprocessed velvet was excluded, and New Zealand producers would have to adjust accordingly.

He said they would have to process more of the velvet in New Zealand before it was exported.

Industries such as beef and lamb, dairy, wine and seafood would also benefit from the phasing out of tariffs over a number of years.