New trade deal and primary exports supercharge economy

2 December 2013

New trade deal and primary exports supercharge economy

A day after major tariff cuts came into effect between New Zealand and Chinese Taipei, Statistics New Zealand has confirmed New Zealand’s terms of trade are at their highest levels since 1973, the year Britain joined the European Union.

“The latest terms of trade, which sees export prices for goods rising more than import prices, may finally consign to history the ghost of Britain’s entry into the EU,” says Federated Farmers Vice-President, Dr William Rolleston.

“This is timely, coming only 24-hours after tariffs were eliminated on our exports to Chinese Taipei of milk powder, cheese, butter, apple, cherries and wine.

“This will result in tariff savings of nearly $40 million on current trade figures. It is great news for our exporters and is set to get greater because tariffs on beef will be eliminated in two years time.

“In three years time kiwifruit tariffs will be eliminated and in four years time, tariffs will be consigned to history on our exports of sheep meat, honey and most fish products.

“Once the agreement is fully implemented, in year eight, tariff savings are estimated to reach $75 million. Given the experience of other agreements, we can safety assume savings are likely to be much higher as our trade expands.

“The good news is that tariffs on 98.5 percent of our trade with Chinese Taipei will be eliminated by year four.

“This underlines why trade is vital to every New Zealander. Regardless of whether you are in a job or looking for one, everyone is part of the export economy and the trade statistics for the September quarter bear this out.

“The price of exported goods rose faster than imports in the September quarter meaning our terms or trade are at their highest since 1973.

“While dairy export prices have led the charge, being 46 percent higher than a year ago, it does seem broadly spread among the primary industries.

“The shame perhaps is that dairy volumes recorded a fall for the fourth consecutive quarter. This highlights the lingering after-effect of this year’s drought showing how the lack of water storage becomes an economic opportunity cost.

“There’s a feeling we may be turning over a new economic leaf led by trade agreements just like the one that has commenced with Chinese Taipei,” Dr Rolleston concluded.

ENDS

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