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Uruguay Trade Negotiations Produce Big Returns

Uruguay Trade Negotiations Produce Big Returns

4 June 2002 - For Immediate Release

Uruguay Trade Negotiations Produce Big Returns

A recently released Ministry of Agriculture and Forestry report estimates that the Uruguay Round (UR) of international trade talks is benefiting New Zealand to the tune of around $590 million a year in additional export receipts.

The full report is available on the MAF website: http://www.maf.govt.nz/mafnet/publications/uruguay-trade-round-negotiations/httoc.htm

The report's primary author, MAF Policy Analyst Hamish Smith, says the Uruguay trade liberalisation round, which concluded in 1994, has been profoundly significant for New Zealand. "Some commentators have suggested that the UR outcome is as significant for our economy as the advent of refrigerated shipping and the negotiation of the CER with Australia," he says.

"While there has been much speculation as to the size of the benefits accruing to New Zealand from the UR, particularly to the agriculture sector, there has not been the same level of research conducted on a retrospective basis - looking at 'what would have been the case' had the Round not been negotiated."

Mr Smith explains that his report effectively rewinds the UR, comparing what the situation is now against what it might have been without the agreement. The report focuses solely on the year 2000, the year that many of the full gains of the UR kicked in (the provisions of the Round were implemented between 1995 and 2000, with developing countries having until 2004).

It shows that with the expansion and then certainty of market access opportunities in the United States beef market, New Zealand earned export receipts of $915 million in 2000, compared with the estimated figure of just under $800 million had the UR not occurred.

Sheepmeat exports to the European Union earned approximately $1,390 million in 2000 with the retention of, and increase in, New Zealand's country specific tariff quota negotiated in the UR. Without this increase, the report estimates our sheepmeat exports would have earned $1,270 million in 2000.

The UR also provided New Zealand with some positive outcomes for the dairy industry - a ceiling on the use of export subsidies, a commitment to a reduction in export subsidy use, and an agreement by the EU to increase and maintain at the higher level New Zealand's existing butter quota.

"Without the UR disciplines on export subsidy use, the EU and the US (to a lesser extent) would have been able to increase their use of this type of trade-distorting mechanism in order to dispose of surplus production," Mr Smith says. It is estimated that the dairy industry was better off to the tune of $346.6 million than it otherwise would have been in the year 2000 as a result of these negotiated outcomes.

The estimated gains illustrated in the MAF report apply to the year 2000 only. Mr Smith says as the UR decisions have been implemented progressively since 1995, it is reasonable to estimate that the total gains to New Zealand agriculture since the conclusion of the Round have already exceeded $1.5 billion. "And the value of those gains is increasing every year," he says. "These results are likely to underestimate the true gains to the agriculture sector (and the wider economy) as the report does not include the gains achieved through reduction in tariff barriers which represent a saving in the value of tariff duties paid. In addition, only selected sectors and markets are considered".


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