Last week, New Zealand signed a Free Trade Agreement (FTA) with Korea. This high quality agreement means economic growth and more jobs for people in Rotorua. Local businesses who export products to Korea will see tariffs reduced, starting next year, over the next 15 years, which means more money in their pockets. This is a huge win for New Zealand exporters, who currently fork out $229 million in duties each year.
This FTA has particular benefit to the people of Rotorua as it sees tariffs on the forestry industry significantly reduced once implemented. In the year ended June 2014, New Zealand exported $503.1 million worth of forestry products to Korea. Within 10 years of this agreement being implemented, these exports to Korea will be tariff free when going over the border.
This is a great opportunity for Rotorua's forestry and other industries. The FTA will mean that exporters no longer have to pay tariffs for their products, including processed timber, to enter Korea. Ultimately, what this means is fewer costs on businesses, more trade with Korea, greater productivity and competitiveness for these businesses which leads to job creation in our city. Tariffs on sawn radiata timber and other processed wood products will be reduced over the next five years.
Trade agreements such as this improve access for exporters and investors to other countries' markets, reducing barriers to trade. Trade agreements establish a set of rules, which make participating countries' regulators work more closely together to create a secure trading relationship.
Trade is critical for New Zealand's economic growth. By selling goods and services to the rest of the world, New Zealand can pay for the goods and services that we import from overseas. It's also critical for us because exports and imports account for around 60 per cent of New Zealand's economic activity. Any savings the Government can secure for businesses through FTAs means money back into the pocket of businesses, to create more jobs here. Our local agricultural and food processing industries are also big winners. The agreement is good for the Bay of Plenty on the whole, as the deal sees a reduction in kiwifruit tariffs from 45 per cent to zero over five years. New Zealand growers export around $76 million to Korea annually and will now receive as much as $8500 extra each year as a result of this reduction in duty rates.
