NZ to insist on terms of FTA as Thailand drags its heels on commitment made 20 years ago.
A dispute brewing between New Zealand and Thailand has blown wide open as the Thais back out of their dairy sector obligations under a free trade agreement signed 20 years ago.
On January 1 Thailand’s remaining tariffs on dairy were due to fall to zero, but since last year they have been signalling they want to back away from the original agreement terms.
NZ trade officials have been working frantically behind the scenes over the past year to try to bring them back onto the same page.
But this week Dairy Companies Association of NZ (DCANZ) CEO Kimberly Crewther confirmed to Farmers Weekly that the Thais are instead doubling down on efforts to renege on the deal, going as far as to impose quota-like limitations on NZ dairy imports.
The first approval round in January approved only one-third of the requested 93,000 tonnes of imported product, she said.
“There was the promise of a further approval round in March, but this has been delayed, and there are now reports that officials are requesting importers to reduce their requested volumes to fit within a 75,000t limit for all import channels.”
She said there are similarities between this dispute and that boiling over with Canadian dairy industry.
“It is similar in the sense these commitments these countries signed up to are under an FTA.
“NZ agreed originally in this FTA to a very long-term phaseout of dairy tariffs and it is deeply disappointing they have chosen this route,” Crewther said.
She said rather than this being a World Trade Organisation issue, it was an issue to be dealt with under the formal terms of the FTA agreement itself. These will now have to be invoked to pull Thailand back to the agreement’s terms.
“We have been working hard to raise concerns with our Thai counterparts, but it has been falling on deaf ears, which drives us to a formal dispute process.”
NZ processors were also disappointed at the lack of official confirmation about the departure from agreement terms.
Thailand is southeast Asia’s largest dairy producer, based on ingredients imported from NZ, the largest dairy exporter to Thailand. NZ’s dairy trade with Thailand was valued at about $450 million in 2024, with the bulk of this as concentrated milk product.
Crewther noted the Thais’ actions are self-limiting, given that NZ products are part of the Thai processing and value chain for its own large dairy exporting sector.
Thailand’s own milk and whey powder production stands at only 15,000t a year, with much of the country’s 600,000 dairy cows contributing to fresh milk production.
A spokesperson for the Ministry of Foreign Affairs & Trade said the government is concerned by reports of restrictions on NZ imports to Thailand.
They said the government is making its expectations clear to Thai ministers and officials that the Thais uphold their obligations under the NZ-Thailand Closer Economic Partnership agreement.
A trade insider expressed exasperation at the outcome, coming 20 years after signing the agreement and citing it as a clear breach of Thailand’s international commitments.
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