NZ meat, wine exports face US uncertainty after border tax talk

The wine and beef industry have significant exports in the US which are now uncertain. Photo / Brett Phibbs

Threat to impose border taxes has exporters worried about access to our third-largest overseas market.

Talk of a border tax in the United States is creating significant uncertainty for New Zealand beef and wine exporters, which count the US as their biggest market by some distance.

The United States is New Zealand's third biggest export destination after China and Australia, taking in $5.3 billion worth in 2016.

Meat exports dwarf all the other New Zealand export products to the US, with beef alone accounting for $1.2b last year.

In sheep meat, the US is the third biggest market with annual receipts totalling $270 million.

The wine trade also counts the US as its biggest market, worth just under $500m and growing strongly. The second biggest is Britain, which takes just under $400m, has its own issues on the trade front after last year's surprise vote to leave the European Union, dubbed "Brexit".

No definitive leads have been released as to exactly what US trade policy will look like under President Donald Trump, but in a tape of a December conversation between then President-Elect Trump and his nominee for Commerce Secretary Wilbur Ross - leaked to the news website Gizmodo and published last month - Trump talked about using stringent food safety measures as a tool in trade negotiations. Trump also discussed a 10 per cent tariff on all imports.

Local exporters said the appointment of a US trade representative would be keenly watched for clues as to where policy will go from here.

Robert Lighthizer, a former official in the Reagan administration, an ardent trade protectionist, and Trump's pick for trade representative, is set to appear before the Senate Finance Committee this week.

Sam McIvor, chief executive of Beef and Lamb New Zealand, said America's choice of trade representative would be key.

"Once that person is appointed, we will be able to get some sort of tenor on what it all means," he said.

"For us, we are pretty concerned about the negative sentiment coming out of the United States regarding trade..

"We are monitoring things very carefully and are in constant dialogue with our intelligence in the market place, and with the Government as well."

McIvor said there was "deep debate" on the issue within the Republican Party - traditionally a free trade advocate.

As it stands, the New Zealand meat industry exports about 218,00 tonnes of beef - mostly for use in hamburgers - tariff free while sheep meat attracts only a small tariff.
The wine trade is also looking closely at developments in the US.

"The United States is our largest market and we export just under $500m of wine to the US every year, and it's growing very rapidly," New Zealand Winegrowers chief executive Phil Gregan said.

As it stands tariffs there are already quite low - just a few cents per litre, he said.

"We are watching and waiting and it is a significant uncertainty, but we are as much in the dark as everybody else," he said.

Like Beef and Lamb, NZ Winegrowers is keeping in close contact with its government and industry connections.

There is also a significant trade uncertainty over Britain - New Zealand's second biggest market for wine - which takes just under $400m - but Gregan said Brexit was more of an opportunity than a threat. New Zealand wine landing in the UK is subject to EU rules.

"If there is a free trade agreement between New Zealand and the UK there may be some relaxation and we could get rid of the tariffs that already exist," he said . "That would be good news I would assure you."

Last month, Reserve Bank Governor Graeme Wheeler said a growing tide of trade protectionism led by Trump was one of the biggest uncertainties for the bank.