Trade minister Tim Groser travelled to Seoul to sign the deal with his Korean counterpart, Yoon Sang-jick. He says the agreement secures the long-term future of Kiwis exporting to South Korea, who are in competition with international exporters from countries like Australia and Canada, which benefit from Korea’s existing FTAs.
“It reduces barriers to trade and investment, provides greater certainty about the business environment and ensures our exporters remain competitive in each other’s market,” Groser says.
Retail NZ general manager of public affairs Greg Harford says free trade is generally good for the retail sector. It allows retailers to offer goods at more competitive prices, and potentially opens up new markets.
South Korea is New Zealand’s fifth largest bilateral trading partner. Data from New Zealand Trade & Enterprise shows that merchandise trade between the two countries totalled $3.28 billion in the year ending December 2012. The NZTE says opportunities for Kiwi businesses exist in the food and beverage market, information and communications technology, and “natural products” which complement South Korea’s sophisticated cosmetics and skincare industry.
New Zealand’s main exports to South Korea are agricultural products and commodities for industrial processing.
BusinessDesk reported that New Zealand exporters pay Korea around $229 million in tariffs each year.
When the FTA enters into force, tariffs on 48.3 percent of New Zealand’s current exports to Korea - $793.7 million’s worth - will be eliminated, although the deal will take 15 years to come into full effect.
“Particular success stories include the removal of wine tariffs of 15 percent on entry into force, and the removal of 45 percent tariffs on kiwifruit effectively five years after entry into force,” says Groser. “It will also make possible a new level of cooperation in areas like agriculture, the creative economy, the environment and education, and spur greater investment.”
When fully phased in, the FTA will remove duties from 98 percent of goods from New Zealand.