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Taiwan deal to save millions in duties, New Zealand

Taiwan deal to save millions in duties

By Hamish Rutherford

10 July 2013

Tens of millions of dollars of duties on New Zealand’s exports to Taiwan will be eliminated over the next four years, after the island nation signed its first trade deal with an OECD nation.

Today’s Economic Co-operation Agreement, signed at Victoria University, is the culmination of more than a year of negotiations, with those close to the deal hailing it as groundbreaking and highly comprehensive.

Although much smaller than China, which officially claims sovereignty over it, Taiwan has a population of 23 million and is New Zealand’s eighth-largest export market.

Despite this, primary goods are typically subject to import duties of 20 to 25 per cent, but many duties will soon be dropped.

As soon as the deal takes effect, tariffs for 44 per cent of New Zealand exports to Taiwan (some $450 million of goods) will be eliminated. This will save duties totalling more than $40m a year for industries including apples, cherries, wine, rock lobsters and almost all dairy products.

After four years, 98.7 per cent of trade duties for New Zealand’s exports to Taiwan will be eliminated, increasing to 99.5 per cent over eight years.

Tariffs on beef will be eliminated over two years and kiwifruit over three years, ending duties of $15m on each industry a year.

Other clauses include broadening the air services agreement, which will mean the cap of seven flights a week between the two countries will be lifted.

A new deal will also set the framework for television and film co-productions, which could allow backdoor access to the restricted Chinese cinema market, with Taiwan exempt from the restriction of foreign films entering China.

Taiwan, meanwhile, will see duties on its exports to New Zealand cut by about $2.5m a year, although the deal may have political spinoffs, with other countries seeing its willingness to negotiate comprehensive deals.

Sensitivities over the relationship - China makes recognising its sovereignty of Taiwan a precondition of diplomatic relations - have played a significant role in the framing of the deal, and even today’s signing.

The agreement is between New Zealand and the "Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu", the name used by Taiwan when it joined the World Trade Organisation.

China, which signed a free trade agreement with New Zealand five years ago, is understood to have been extensively briefed on the negotiations and has been made aware of today’s signing.

Today’s event could not to be held at an official state location because of rules governing New Zealand’s relationship with Taiwan, as allowed by China. No government ministers attended the event.
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The details of the trade deal will be presented to Parliament tomorrow, but it is not expected to meet resistance that could prevent it being ratified.

Labour’s foreign affairs and trade spokesman Phil Goff was briefed on the deal after a visit to Taiwan in January. His party believed when it struck a deal with China in 2008 that today’s deal might follow at some point.