Fears there may be hedging on terms of trade pact as deadline for tariff-free trade nears.
Alarm bells are ringing in the dairy industry as the full effect of a free trade deal signed with Thailand almost 20 years ago could be compromised early next year.
In 2005 New Zealand and Thailand signed off on the Closer Economic Partnership (CEP), and exports from here to there have tripled since that time.
Today the Thai market accounts for $1.5 billion of exports, with the vast majority being dairy products.
Thailand is the single largest dairy exporter among ASEAN countries, the trade effectively driven by importing NZ dairy milk powder products and re-exporting to neighbouring Asian nations.
The CEP conditions required all tariffs to be lifted completely by January 1 2025 under CEP terms on milk and cream, flavoured milk and skim milk powder. The CEP out-of-quota tariff on fluid milk is currently 37%.
But Kimberley Crewther, executive director of Dairy Companies Association of NZ (DCANZ) said the Thai government has recently consulted with NZ seeking a process requiring approval from the Thai Milk Board to give NZ products tariff-free entry.
“We are concerned this approvals process could maintain a quantitative limit on imports,” she said.
“DCANZ has raised our concerns through the formal submissions process. We await further updates on these proposals and if the intent for an approval from the Thai Milk Board is maintained, confirmation of what criteria would apply.”
She said it would be disappointing if, after completing the FTA, new barriers were presented by the Thai government.
“NZ and Thailand have a longstanding dairy trade relationship, which will benefit from the full FTA implementation process,” she said.
A Ministry of Foreign Affairs and Trade spokesperson said it is closely monitoring Thailand’s preparations for a full CEP and has raised with Thailand expectations that exporters and Thai imports will receive the CEP’s full benefits.
“NZ expects all our trading partners including Thailand to honour their FTA obligations, in this case for the smooth transition from quantitative restriction to tariff- and quota-free trade.”
The spokesperson said the CEP contains a dispute mechanism including arbitration and consultation, if required.
Thailand is NZ’s ninth largest two-way trade market, with milk products dominating exports there at $800 million, and with $100m a year in apple and produce sales coming second.
As the second largest Southeast Asian economy after Indonesia, the Thai economy has had the number of people living below the poverty line fall from 66% in 1988 to 8% in 2018.
• Rennie is travelling to Thailand this week as part of a business media tour, courtesy of the Thai government.
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