Within the next four years, 98% of all trade duties will disappear, and as soon as the deal takes effect, tariffs for 44% of exports will be eliminated.
This will save duties totalling more than NZ$40m (US$31.6m) a year for industries including apples, cherries, wine, rock lobsters and almost all dairy products.
After four years, 98.7% of trade duties for New Zealand's exports to Taiwan will be eliminated, increasing to 99.5% over eight years. Tariffs on beef will be eliminated over two years and kiwifruit over three years, ending duties of NZ$15m (US$11.9m) on each industry a year.
One of the beneficiaries, the Dairy Companies Association of New Zealand, declared the agreement “a good deal”.
However, the trade group pointed out that fluid milk would be an exception to short-term tariff elimination and subject to a 12-year transition period as the vast majority of Taiwanese milk production is consumed in this format. Until this segment is eliminated altogether, an expanding tariff rate quota will apply.
DCANZ chairman Malcolm Bailey said that the agreement, which followed a year of negotiations, was a great outcome and would have definite economic benefits for both economies.
“This is a good deal. Taiwanese consumers will benefit as New Zealand dairy exporters and Taiwanese companies work in complementary ways to meet the growing demand of the Taiwanese population,” he said in a statement.
New Zealand has supplied dairy products to Taiwan for nearly 30 years as Taiwanese consumption has continued to expand in-line with rising GDP. But because domestic production alone cannot meet the demand, the country is forced to import products from overseas.
In 2012, Taiwan was New Zealand’s fifteenth largest dairy export market and eighth overall. Northbound dairy exports are valued at over NZ$300m (US$238m). New Zealand exporters currently face import tariffs on dairy of between 5% and 15%.
Taiwan, meanwhile, will see duties on its exports to New Zealand cut by just NZ$2.5m (US$2m) a year, although it might see further international agreements once other countries learn of its willingness to negotiate comprehensive deals.