Tariffs on New Zealand exports to Korea have tumbled under the NZ-Korea Free Trade Agreement that finally entered into force in December 2015. From duties in excess of 300% on some goods to well below 10% or even zero on key export items.
The FTA is a major boon for many New Zealand exporters who have been hopelessly uncompetitive in this market, particularly against major export rivals such as Australia, Canada, the EU and Chile who already have FTAs with this lucrative export destination.
While some say the deal is not of the caliber of other, high profile FTAs such as the NZ-China FTA, due to Korea's unyielding position on many areas of trade, its undoubtedly a major win for a number of our major export sectors including dairy, meat, kiwifruit and wine.
Other sectors have not faired so well. A quick look at the tariff finder on www.tariff-finder.fta.govt.nz shows that exporters of apples, capsicums, frozen squid, honey, live abalone, onions, pears and persimmons will be disappointed by the deal. Its said Korea excluded these products from the deal due to domestic sensitivities or 'plant health concerns'.
Dairy products are still under quota, which will slowly phase out over the next 10-15 years. For example, the 2016 in-Quota tariff of 0% for butter, oils and other fats (HS Code 0405.10.00.00) is 824 tonnes (across two butter and other fat lines). After this volume is reached the Out-of-quota tariff sky rockets to 71.2%. Unfortunately the milk powder quota is capped, but New Zealand is not alone in this with EU exporters also operating under a capped quota system and Australian exporters having gained no milk powder concessions as yet.
For more information about the NZ-Korea FTA visit the New Zealand Foreign Affairs & Trade website, or click here.