Milk Powder | New Zealand‘s milk powder exported to China will achieve zero tariffs within three years

On January 26, 2021, on behalf of China, the Chinese Minister of Commerce, Mr. Wang Wentao, signed a protocol with Damien O'Connor, Minister for Trade and Export Growth of New Zealand, on upgrading their Free Trade Agreement (FTA). This has been the first update since the FTA was signed twelve years ago.

Minister of Trade and Export Growth of New Zealand, Damien O’Connor, indicated that with the economic confusion caused by the COVID-19 situation, the FTA upgrade is part of New Zealand’s trade recovery strategy to answer the economic impact caused by the coronavirus. He also emphasized that the relationship with China is always one of the most important diplomatic relationships of New Zealand. The FTA upgrade is expected to bring more benefits to the businesses and people of China and New Zealand.

In the amendment to the FTA are new stipulations regarding online and offline competition, as well as environmental standards. Furthermore, the revised FTA will include new rules for customs protocol and the sourcing of product materials.

Chinese duties on New Zealand dairy products to be eliminated within three years

The FTA upgrade will retain the current stipulations for dairy products. While the safeguard duty of most of the products will be canceled within one year, the safeguard duty of milk powder will be canceled within three years, which means that all dairy products imported to China from New Zealand will be exempt from customs duties from January 1, 2024. This will bring large benefits to dairy enterprises in New Zealand.

Official data from New Zealand shows that China invested a total of 340 million US dollars in New Zealand in 2019, and China was considered to be the second largest source of foreign capital. It is believed that the FTA upgrade will attract more Chinese investment to New Zealand after taking effect.

According to some public records, New Zealand is the largest dairy product exporting country in the world. The total dairy export volume of New Zealand accounts for 1/3 of the global dairy trade. Data from Chinese customs shows that from January to November, 2020, China imported 306,700 tons of baby formula milk powder from other countries, with 63,800 tons of milk powder from New Zealand, which accounts for 20.8% of the total dairy import volume in China, becoming China’s second biggest customer after Europe. Dairy products from New Zealand also rank first in the imported dairy market in China.

China’s new partnership with New Zealand puts pressure on Australia

A dairy analyst in China pointed out that the FTA upgrade makes it convenient for China to import dairy products from New Zealand, brings more benefits to the customers, and also helps develop Chinese dairy enterprises in New Zealand. In addition, China and New Zealand’s signing of the Regional Comprehensive Economic Partnership (RCEP) will improve the relationship between China and Australia.

Since 2020, Australia has prevented the export of agricultural products such as lobsters, wine, wood, and beef to China. Nowadays, the FTA upgrade brings more advantages to New Zealand, which will give a hard blow to Australia’s agricultural and dairy market. According to a news report from Australia Broadcasting Corporation, on January 24, Minister for Trade, Dan Tehan, said that he has sent positive news to China in the hope that he could break the ice on trades between China and Australia and create more opportunities for trade.

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Topics |
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