$50m lost as cuts to tariffs go unclaimed

CLAIRE ROGERS
Last updated 05:00 17/10/2012

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Kiwi companies are missing out on at least $50 million a year in free trade savings with China - with as many as half of all products exported not receiving tariff reductions or exemptions they are eligible for.

New Zealand firms were currently saving about $50m a year in tariff cuts under the trade agreement, Michael Swain - the Ministry of Foreign Affairs' former consul-general in Shanghai - told Hawke's Bay businesses at an ExportNZ conference in Napier yesterday.

"That's only a small proportion of what's actually out there."

Figures from 2010 showed about half of eligible products were entering China duty free or under low tariffs and about half were not, he said.

"There's probably at least another $50m in savings not being made in tariffs currently being paid."

New Zealand Customs Service senior analyst Roger Weston said exporters could face a range of obstacles to securing tariff cuts including problems with tariff classifications and disputes about the authenticity of a product's certificate of origin.

About 80 per cent of exports had to transit through other countries, and China Customs sometimes sought assurance those products had not been "manipulated" in transit, Weston said.

That could often be proved through a certificate of non-manipulation from the transit country, "but they may not be available or may not be recognised from all transit countries".

Swain said dealing with China Customs and China's General Administration of Quality Supervision, Inspection and Quarantine could be difficult, as neither organisation was transparent.

The range of New Zealand products eligible to enter China duty free had rocketed this year - four years after the trade agreement was signed.

For example, tariffs for most honey, wine, sheepskins, and fresh and frozen seafood had fallen from between about 14 and 18 per cent of the product's value to zero.

New Zealand was still the only developed economy with a free trade agreement with China, and that meant now more than ever New Zealand firms should be looking to cash in, Swain said.

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- BusinessDay.co.nz

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