Reducing tariffs, increasing trade
A year after ANZTEC took effect, statistics from the ROC Ministry of Economic Affairs from between December 2013 and September 2014 show an increase of 24.57% in exports from New Zealand to Taiwan, and of 14.97% in exports from Taiwan to New Zealand compared with the corresponding period one year previously. This shows that both sides are enjoying clear growth in the wake of the agreement.
Taiwan is New Zealand’s tenth largest export market and 13th largest trade partner. While New Zealand’s main exports are agricultural products, overall these products complement Taiwan’s own agricultural products.
New Zealand agricultural products—including milk powder, cheese, butter, mutton, beef, kiwifruit, apples, and cherries—account for a significant amount of the Taiwanese market for such products. Since ANZTEC took effect, tariffs have been reduced to zero on over 8500 such products.Another 479 New Zealand agricultural products will have tariffs eliminated over a period of two to 12 years. However, there are no reductions in tariffs on imports from New Zealand of 11 rice-based products that are critical to Taiwan’s agricultural sector, while other New Zealand products, such as deer velvet and liquid milk, are subject to quotas.
Tariffs are a protective measure, and as such their reduction or elimination may not necessarily be reflected in market prices. However, it can be beneficial to businesses. Export New Zealand executive director Catherine Beard explains that the reduced tariffs can give companies more room for innovation and development: “The money you save can be reinvested in businesses, in innovation, in product R&D, in focusing on how your business can be globally competitive. I think businesses can be globally competitive without subsidies and protection.”
For Taiwan’s part, most of its exports to New Zealand are products like threaded fasteners, hand tools, digital devices, bicycles, steel and building materials. Under ANZTEC, tariffs were removed from more than 7000 Taiwanese products upon the agreement taking effect, while tariffs on 29 industrial products will be reduced over four years.
Experts on both sides estimate that Taiwan stands to save US$13 million in tariffs each year in the early days of the agreement, while New Zealand could save as much as US$75.8 million a year. For those involved in international trade, the benefits of ANZTEC are quite evident.
The New Zealand market is a mature one, and according to Taiwan External Trade Development Council associate researcher Huang Ya-ling, there is significant potential for Taiwanese exporters of items including food, steel, metal parts for hand tools, communications products, bicycles and bike parts, and sporting goods.
In terms of food products, though, it may still be an uphill struggle. Harry Yang, managing director of T-Mark, Auckland’s largest Asian supermarket chain, notes that while New Zealanders may be more confident in food products from Taiwan than in those from mainland China, the market is still limited, and “Kiwis just don’t buy them.” As if to illustrate his point, with rents and operating costs rising, T-Mark had to close down one store and begin focusing more on online sales in 2015.
The unspoiled environment and natural purity of its agricultural products have made New Zealand the seventh largest source of agricultural imports into Taiwan.