18 Nov 2014

NZ may look again at China trade deal

9:09 am on 18 November 2014

Trade Minister Tim Groser is promising fresh trade talks with China if its new trade deal with Australia is better than the agreement with New Zealand that took effect in 2008.

Mr Groser says if Australia has been given a better agricultural deal he will take up the issue with Beijing.

Tim Groser

Tim Groser Photo: REUTERS

Canberra's agreement means most Australian dairy products will not be subject to safeguards that apply to New Zealand exports, where a tariff is applied when a quota is reached. The ABC reports only whole milk powder is expected to have the safeguards applied in the Australian deal.

Under this country's deal, if China secures a better arrangement with another country, it must match that with New Zealand.

Mr Groser told Morning Report he would address this situation with China.

"Unquestionably we would have a discussion with the Chinese authorities in due course on that point.

"I don't really think we're going to do this during this week with the Chinese president's visit - this has to start off at a lower level than head of government."

President of China Xi Jinping, Australian Prime Minister Tony Abbott and Fortescue Metals CEO Andrew Forrest after the signing of a framework for the free trade agreement in Canberra on Monday.

President of China Xi Jinping, Australian Prime Minister Tony Abbott and Fortescue Metals CEO Andrew Forrest after the signing of a free trade agreement framework in Canberra on Monday. Photo: AAP

Australia and China have signed a Declaration of Intent - a framework for a free-trade agreement - six years after New Zealand's deal with China took effect in October 2008.

The ABC has quoted Federal Trade Minister Andrew Robb as saying the provisions for dairy products in $A18 billion deal is better than in New Zealand's deal.

If the agreement goes through, all tariffs on Australia's dairy products going into China will be lifted within 11 years.

More about Australia's free trade declaration with China

A reporter for ABC Rural, Lucy Barbour, said the 15 percent tariff on Australian infant milk formula will be phased out within four years.

She said liquid milk would be tariff-free in nine years and there were moves to eliminate tariffs on cheese, yoghurt and butter over the same timeframe.

"Andrew Robb said this deal would be equal to New Zealand's and as far as dairy goes it is a better deal," she said

Ms Barbour said the National Farmers' Federation, Australia's key farming lobby group, had been lobbying for a deal for some time and it was delighted and "nothing but pleased".

"It is something that I am sure New Zealand farmers will be very keen to see how it plays out.

"I think the interesting thing to watch will be how farmers in the Australian sector capitalise on this deal and actually make the most of it."

NZ still 'best' dairy supplier

A New Zealand agriculture academic said Australia's potential free trade deal with China will be about the same as New Zealand's in the long run.

Jacqueline Rowarth, an agri-business professor at the University of Waikato, said New Zealand will still be a good supplier.

"I think they are just taking competition a little too far ... they're clearly feeling vulnerable," she said.

"We can still do it more efficiently, we do have water that comes out of the sky - this is not the case in Australia at all times of the year. New Zealand is still the best place to do grass-fed dairy production."

Professor Rowarth said Australia also had hot temperatures that cows do not like and its deal might only be a better one for a short time.

"What we can remember with China is they're building up their own supply and they have got caveats, or checks and reviews at various stages - so at any stage things could change."

no caption

Milk would be tariff free in nine years. Photo: AAP

Removal of tariffs in Australian agreement

  • Dairy products (some as high as 20 percent) within 4-11 years
  • Beef (12-25 percent) over nine years
  • Pork (up to 20 percent) within four years
  • Live animal exports (10 percent) within four years
  • Sheep meat (12-23 percent) over eight years
  • Horticultural products (up to 30 percent) most within four years
  • Wine (14-20 percent) within four years
  • Barley (3 percent) immediately
  • Seafood (up to 15 percent) over four years
  • Processed food, including fruit juice and honey
  • Hides, skins and leather (5-14 percent) over two to seven years
  • An Australia-only duty free quota for wool

Not included in a free trade deal

  • Rice, wheat, cotton and sugar, but will be renegotiated three years after signing

Key facts

  • The Australian dairy sector will get a better deal than New Zealand, especially unlimited preferential access on all produce except whole milk powders which face a discretionary safeguard.
  • China is Australia's second-largest market for dairy exports worth A$351 million in 2013
  • China is Australia's largest agriculture and fisheries market, worth about A$9 billion in 2013
  • China will account for 43 percent of global growth in agricultural demand by 2050
  • The OECD estimates beef will be the fastest-growing import sector in China
  • Australian beef exports to China set new records in 2013, totalling A$722 million
  • China is Australia's most important sheepmeat market worth A$385 million in 2013
  • China accounts for 75 percent of Australia's wool exports. Australia is China's largest source of wool (69 percent)
  • Hides and skins were worth A$896 million in 2013 - 10 times more than Australia's next largest market Italy
  • If the New Zealand free trade agreement is any indication, Australia's seafood exports - worth A$38 million in 2013 - will increase significantly after the removal of tariffs.
  • China's wine market import market is growing dramatically, nearly doubling in size since 2010 and worth A$1.6 billion in 2013. Both New Zealand and Chile have preferred access.
  • China is Australia's second largest market for live animals, worth A$142 million in 2013.

Get the new RNZ app

for ad-free news and current affairs