China tariff cuts a 'foot in the door' for NZ paper, packaging

Tuesday 5th November 2019

A phased tariff reduction for a range of paper and packaging products is an extra “foot in the door” into the Chinese market for those products, the country’s wood processors say.

An upgrade to New Zealand’s free-trade agreement with China yesterday secured a wind-down in tariffs on about 15 products over 10 years. That will deliver a $2 million benefit by the 10th year on trade currently worth about $36 million annually, the Wood Processors and Manufacturers Association of New Zealand says.

While that may seem like a small gain, association chair Brian Stanley said the products had been excluded since the original FTA in 2008.

Signals from China earlier this year were that no new products would be added to the agreement in the latest upgrade talks, and he said Prime Minister Jacinda Ardern and Trade and Export Growth Minister David Parker were to be congratulated for getting them “on the table.”

“The government has actually achieved something we didn’t think was ever going to happen,” Stanley told BusinessDesk. “This is a foot in the door.”

China is New Zealand’s biggest export market, with two-way trade between the countries worth about $32 billion in the year ended June 30.

Wood products are New Zealand’s third-largest export commodity. Global sales were worth about $6.5 billion in the year ended Sept. 30, with logs and timber accounting for about $5.2 billion of that. Paper and paperboard exports were worth $498 million in the same period.

China is the biggest market for New Zealand logs and was already an important market for the country’s ply, fibreboard and wood pulp when the original free-trade deal was inked in 2008.

Most wood products didn’t face tariffs then. Of those that did, 48 have since benefited from reductions or their elimination to bring them into line with commitments China has made to other countries, government officials said yesterday.

While the WPMA is pleased by the latest gain, Stanley noted that non-tariff barriers remain an obstacle in many countries, including those New Zealand already has free-trade agreements with.

Manufacturing subsidies are a particular challenge, which in China can include support for everything from electricity to transportation and land purchases, but which can also be hard to prove, he said.

(BusinessDesk)

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