India trade deal a valuable prize - Horticulture Export Authority

Monday 3rd December 2018

India could become a major export market for fruit and vegetable growers if progress could be achieved on reducing tariffs on New Zealand goods, the Horticulture Export Authority says.

Exports of apples and avocados to India have roughly doubled since 2016, while kiwifruit sales there have also grown significantly in that time.

And that is despite India imposing tariffs of 30 to 50 percent on most commodities. It charged about $27.4 million on New Zealand produce in the year through June, up from $16.4 million in 2016.

“This represents 44 percent of the value of all exports to India, which is by far the highest rate of any export destination in 2018,” the authority said in its biannual report on export trade barriers.

“These high tariff rates highlight the value to horticulture of progressing the New Zealand-India Free Trade Agreement - in tandem with the RCEP agreement - and the potential for India to become a top export destination for horticulture if tariffs can be reduced.”

India, with about 1.3 billion people is the world’s second-most populous country and the seventh-largest economy. New Zealand has been seeking a free-trade agreement for more than a decade. A joint study was completed in 2009 but 10 rounds of formal talks ended in Delhi in 2015 without result.

Unfortunately, talks on the 16-country Regional Comprehensive Economic Partnership deal – which includes India – also appear stalled. India’s reluctance to lower tariffs on goods in 2019 – an election year – is a factor, the Japan Times reported last month.

New Zealand exported about $3.6 billion of fruit and vegetables in the year through June, 7.6 percent more than two years earlier. That was about 60 percent of total production. The European Union and China - excluding Hong Kong - were the two biggest markets at $813 million and $581 million respectively.

But the cost of tariffs – including insurance and freight – on the total trade increased by more than 12 percent to $21.4 million, or $42,800 for each of the country’s 5,000 growers, the authority said.

Non-tariff measures, such as delays in assessing access requests, import quotas, additional import licensing requirements, extensive product-labelling requirements, and pre-shipment inspections, are also increasing.

“In a number of cases, the economics of compliance with phytosanitary requirements can make trade unviable. Where specific products have access to a market, the cost of maintaining that access is rising and likely to require additional resourcing.”

The “obvious swing” to more nationalistic and isolationist policies in the current international environment also makes further protectionist trade policies more likely, the authority noted.

That said, New Zealand now has 11 free-trade agreements in place. The 2015 agreement with South Korea saw the value of tariffs as a percentage of exports this year almost halve from 25 percent in 2016. While the value of tariffs fell by $4 million, the value of fruit and vegetable exports increased by $38 million, or 47 percent.

The Comprehensive and Progressive Trans-Pacific Partnership coming into force on Dec. 30 will also reduce tariffs with a number of significant trade partners, particularly Japan.

The cost of tariffs in Japan, the third-biggest buyer of New Zealand produce, will fall about 80 percent when the new agreement comes into force, the authority said.

(BusinessDesk)

Comments from our readers

No comments yet