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Why the Wairarapa should welcome Trade Agreements

Media Release - Friday 30 July

Why the Wairarapa should welcome Thai and Chinese Trade Agreements

Wairarapa residents have a lot to gain from trade agreements with Thailand and China, TLN Executive Director, Suse Reynolds, told the South Wairarapa Probus meeting in Greytown today.

Below is an excerpt from her speech. For a full copy see attachment.

The Prime Minister has said trade is New Zealand's lifeblood. She's quite right. Let us look at where trade fits in our economy. Our exports total about $40 billion per annum: of which services equal $10 billion, dairy $7 billion, meat $4 billion, wood $3 billion, and fish $1.5 billion.

So where do the Thai and Chinese trade agreements fit into all these enormous numbers and what do they mean to the Wairarapa?

Over one hundred and fifty thousand beef cattle and nearly two million sheep graze your region's farms. More than 80 percent of the meat they produce is sold into some 60 different off shore markets. Another hundred and ten thousand dairy cattle produce about 4 million litres of milk a year and almost all of it (95 percent) is consumed outside New Zealand. More than a quarter of your workforce is employed in agriculture; nationally the corresponding figure is only 10%.

The Chinese spent $70 million on New Zealand meat last year. Tariffs added at least 15% to the price they paid. A trade agreement should lower these tariffs and offer real potential to grow this market. We actually export very little meat to Thailand due in large part to prohibitive tariffs of up to 50%. Lowering these tariffs offers opportunities in a market of over 63 million people.

China is still our largest market for wool. It's worth over $140 million, but we face tariffs of up to 38%. The Chinese sheep flock is the biggest in the world and a long way from the level of sophistication reflected in our sheep industry. Opening the Chinese market to New Zealand producers of sheep meat and wool is therefore unlikely to be easy as Chinese negotiators will want to protect their producers from our more efficient ones. Our negotiators must be encouraged to "hang tough" and ensure we do get more access to this market.

Over 5% of the Wairarapa's total land area is planted in trees. Forestry and wood products manufacturing contribute over $20 million a year to your region's wealth or GDP and it is responsible for more than 400 jobs. Wood is the country's fifth largest foreign exchange earner generating about $2 billion a year.

New Zealand's $120 million worth of log exports to China enter duty free, but particle board, like that produced by Juken Nissho up the road, faces 18% tariffs and kitset housing faces a 22% tariff. Imagine the markets that could be generated if the cost of these products were reduced to Chinese consumers by negotiating lower tariffs.

The Wairarapa has a vibrant horticultural industry, with hundreds of hectares of vegetables, fruit and wine grapes planted in recent years. At least 40% of our vegetable production and 70% of our fruit production is exported.

Tariffs on horticultural exports to China are between 13-17% but once other duties and taxes are added that can rise to 28% to 56%. Thai tariffs on horticultural products range between 10% and 60%. Think about the opportunities if these tariffs could be reduced.

Nearly half the value of New Zealand's total wine sales comes from exports. Conservative estimates put China's wealthy middle class at 25 million and it is growing every day. They are all clamoring for luxury goods like those from the Wairarapa's twenty six wineries.

The region earns millions of dollars of foreign exchange from the export of services too.

Tourism is our largest foreign exchange earner at around $6 billion a year and is responsible for around 1600 jobs in the Wairarapa or 12% of the total employment in the region. About 70,000 Chinese and 20,000 Thais visit us every year. The wealthier those countries become, the more their citizens will travel and the more they will spend. Concluding trade agreements with these countries will raise New Zealand's profile and attract more visitors.


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