Free Trade Agreements with Korea and South East Asia

Media Release - 03 March 2009

A free trade agreement (FTA) with Korea could return $33 million a year to New Zealand Kiwifruit growers, ZESPRI said today following the government’s announcement of formal negotiations between the two nations.

The Korea announcement is hot on the heels of last week’s signing of free trade agreements between the South East Asian nations, Australia and New Zealand (AANZFTA).

ZESPRI Group Chairman John Loughlin met with the Republic of Korea President His Excellency Mr Lee Myung-Bak on Tuesday during his visit to New Zealand. Mr Loughlin said the company strongly supports the government’s move towards reaching an FTA with the Republic of Korea.

“Korea is a very important market for ZESPRI. New Zealand exports around 24,000 tonnes of ZESPRI® GREEN and ZESPRI® GOLD Kiwifruit to Korea each year. In 2008, this market was worth $100m to New Zealand kiwifruit growers.”

Mr Loughlin said that Korea’s current tariff on New Zealand kiwifruit is the highest in the world at 45 percent. This translates into a cost of $33.3 million each year, or $8,000 per grower.

He said ZESPRI has invested heavily in the Korean market over the past six years and has earned a reputation as a responsible marketer of quality fruit.

“In addition to spending more than US$30million on advertising and promotion in Korea, we have partnered with local kiwifruit growers on the island of Jeju to produce ZESPRI® GOLD Kiwifruit, under licence, for the Korean market.”

Mr Loughlin explained that a free trade agreement would secure New Zealand Kiwifruit’s premium position in the Korean market during the New Zealand off-season.

“Chile, one of our competitors in Korea, has a free trade agreement which will see its tariffs reducing to zero by 2014. ZESPRI has a superior quality product and marketing and service support, but unless we are able to remove the tariff our ability to service this market becomes unsustainable. With a free trade agreement of our own, New Zealand Kiwifruit can compete on a level playing field and win in the market on the basis of our premium quality fruit.”

The announcement of negotiations between New Zealand and Korea follows last week’s signing of an FTA between the South East Asian Nations, Australia and New Zealand (AANZFTA). Tariff reductions resulting from that agreement will make markets like Indonesia, Malaysia, Vietnam and the Philippines even more attractive and will deliver increases in net returns to the New Zealand kiwifruit industry, Mr Loughlin said.

“We congratulate the New Zealand government on securing these deals, which will deliver positive long term benefits to the economy and ZESPRI growers,” he said.

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