Falling trade barriers good news for NZ farmers

By SIMON COLLINS

New Zealand farmers stand to gain, but 100,000 Taiwanese farmers are expected to be driven out of business when Taiwan and China join the World Trade Organisation this year.

China and Taiwan, each among New Zealand's 10 biggest export markets, have agreed to sweeping cuts in import protection to gain admission to the trade body.

Taiwan will drop its longstanding ban on imports of liquid milk, persimmons, Asian pears, squid, Mackerel and deer velvet. Its quota restriction on apple imports will be abolished, and duties will be cut on milk powder, meat, fish and timber.

China will cut import duties on dairy products, fish, timber, methanol and numerous manufactured goods.

Trade NZ says China's cuts alone will save New Zealand exporters $33 million in duties.

"It's very exciting news for New Zealand exporters," said Charles Finny, the new director of the NZ Commerce and Industry Office in Taipei.

But Cheng-Mount Cheng, of the Taiwan Institute of Economic Research, said the change was likely to drive 100,000 of Taiwan's 1.4 million mostly part-time farmers off the land.

Ironically, one of the biggest effects of the change will be to legitimise trade between Taiwan and China. Although China is one of the biggest markets for Taiwan's high-tech manufacturers, Taiwan still bans imports from there, and has a huge $US13 billion ($31.6 billion) annual trade surplus with China.

Since 1984, Taiwanese companies have invested $US70 billion in China, mainly through Hong Kong, to take advantage of low Chinese wages.

Taiwan's leading computer company, Acer, has just laid off 500 staff at home and is spending $US1.3 billion on expanding its production in China.

The two countries have been excluded from the WTO because it could not decide which of them truly represented China.

Now, after more than a decade of separate talks with WTO's members, both countries have agreed to reductions in protection that broadly match the cuts made by other WTO member countries over the past 50 years.

Mr Cheng said he did not expect that Taiwan would allow free entry of Chinese farm products, for "hygiene" reasons, but it has already agreed to cut most duties on agricultural imports from other countries, including New Zealand.

Taiwan is also under pressure from its main export market and military protector, the United States, to allow rice imports.

Joining the WTO will allow both China and Taiwan to negotiate free-trade agreements along the lines of last year's NZ-Singapore deal, which is now being emulated throughout Asia.

"Some people talk about a free-trade area of China, Japan, Korea and Taiwan, but so far they are just talking," Mr Cheng said.

"Korea and Japan have already begun negotiating free trade so we [Taiwan and China] are both watching carefully. If they succeed, there is a chance China will join, and Taiwan as well."

Mr Finny said New Zealand would also be keen to seek free-trade agreements as soon as China and Taiwan joined the WTO.