South Korea may stick to dairy tariffs

HAMISH RUTHERFORD
Last updated 08:27 05/09/2014

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A free trade deal with South Korea is inching closer, with Prime Minister John Key personally intervening to help progress negotiations.

But he has warned that any agreement may not be "absolutely comprehensive" amid claims that the Koreans are refusing to eliminate tariffs on dairy products.

This week the Government has been coy about the progress towards a free trade agreement (FTA) with South Korea, one of the world's 15 largest economies, meaning it would be the largest such deal stuck since National took office in 2008.

Key said yesterday he had spoken with Korean president Park Geun-hye recently.

Trade Minister Tim Groser refused to comment although he confirmed he had met his South Korean counterpart, Yoon Sang-jick, during an Asean meeting in Myanmar last week.

Sources say that meeting was brokered by Key in his call with Park, and that Groser and Yoon thrashed out the broad terms of an agreement New Zealand may be willing to sign.

If the deal meets political acceptance in Seoul, officials would then write up a full deal in the coming months.

Key said yesterday that a deal was getting "much, much closer" although he signalled New Zealand may accept one which would not completely eliminate tariffs on agricultural products.

"We'll do the very best we can," he said.

"I can't guarantee it'd be absolutely comprehensive," Key said, adding that the Koreans were "hard negotiators" meaning that Australia and Canada had accepted deals in which they did not make the gains they were hoping for.

"But it is a really big market for us and it's important that we try and take some steps forward."

Key's comments match rumours that the proposed deal would benefit meat and fruit producers, but there may be little reduction in tariffs for dairy products, New Zealand's largest export.

Steven Jacobi, executive director of the NZ International Business Forum, said South Korea wanted to ratify the Australian and Canadian deals along with others it has in the pipeline, but was being lobbied by Australia and Canada to get theirs signed.

"The worry is that as long as we continue arguing with the Koreans about this agreement the greater the risk they'll decide to move these two on, in advance of us," he said.

"That might be the conundrum that the Government is working through at the moment. Obviously, because it's taken this long to conclude it hasn't been plain sailing ... The Government might have some difficult trade-offs to make," Jacobi said.

A free trade deal with South Korea has been targeted for years, with Key saying back in 2010 that be believed an agreement could soon be reached.

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After previous negotiations failed, he announced a resumption of direct talks last year during a state visit to Seoul, where he was accompanied by a large delegation of Kiwi veterans to commemorate 60 years since the Korean War.

At the time he said there was a 50/50 chance a deal would be reached within a year, but that target passed and a senior government source said the talks since have been "awful" at times.

New Zealand officials are believed to have walked out of previous talks, while an earlier meeting between Groser and Yoon at an OECD meeting in Paris earlier this year failed to make any progress.

- The Southland Times

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