Decisions on post 2005 tariffs

After a six-year freeze, tariff rates will again begin reducing, but the government has held off moving to a zero tariff regime, Commerce Minister Lianne Dalziel announced today.

Today, Lianne Dalziel, Trade Negotiations Minister Jim Sutton and Economic Development Minister Jim Anderton announced the government's tariff policy for post 2005.

Under the government's decisions the highest tariff rates of between 17 to 19 percent, which apply largely to clothing, footwear and carpet, will begin reducing from 1 July 2006. These rates will reduce gradually to 10 percent by 1 July 2009.

Tariff rates on all other goods will reduce to 5 percent by July 2008, as set out in the table below. Alternative specific tariffs, which apply almost solely in the clothing area, will revert to the apparel ad valorem tariffs on 1 July 2005.

"These decisions were reached after consideration of a wide range of issues raised by many business groups and firms throughout New Zealand. The tariff programme we have adopted represents a careful weighing of all viewpoints.

"On the one hand the government has recognised the need for firms to continue to move up the value chain, and become more innovative and internationally competitive," Lianne Dalziel said.

"Previous tariff reduction has generated significant productivity and welfare gains, especially for consumers.
"However, we have also recognised that previous tariff reductions have imposed significant adjustment pressures on industries and particularly in certain regions," Lianne Dalziel said.

Jim Sutton said there is also international uncertainty surrounding tariff liberalisation, both in the WTO and APEC.

"The government is not prepared, therefore, to move to a zero tariff regime at this time. We will still retain some trade negotiating coin.

"By comparison, Australia's current apparel tariff of 25 percent will fall to 17.5 percent on 1 January 2005. Australia has completed its review of textile, clothing and footwear tariffs beyond 2005, but has not yet announced its decisions," Jim Sutton said.

Jim Anderton said the government's decisions were aimed at minimising adjustment pressures to firms and regions. They involved very gradual reductions of tariffs overall, with no Normal tariff falling below 5 percent before 1 July 2009.

A further review in 2006 will determine the tariff rates after 1 July 2009.

"The government will also be working closely with the textile, clothing, footwear and carpet industries, in particular, to ensure that existing industry and regional development policies are effective in helping these industries work through the adjustment process," Jim Anderton said.

Australian and New Zealand Ministers recently agreed to examine the CER Rules of Origin (ROO) requirements with a view to considering improvements which will benefit business on both sides of the Tasman. New Zealand industry will be consulted on this soon, and the review is due to be completed in 2004.

The Ministry of Economic Development's report on the Tariff Review, and the list of the government's key tariff decisions are being released with today's announcement.
To view online: http://www.med.govt.nz

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