An Invitation to Participate
[ Last Updated 27 January 2006 ]
February 2002
Contents
Background
The Ministry of Economic Development, on behalf of the Government, is managing a broad based review of New Zealand's tariff policy. The Review is being undertaken to determine New Zealand's tariff regime after the current freeze ends on 1 July 2005. This document provides background information and invites submissions to the Tariff Review. If your business, industry sector or region has an interest in tariff policy, we would like to hear from you.
The Review will analyse the role of tariffs in achieving the Government's broader economic development objectives and supporting New Zealand firms' ability to compete internationally. This means the Review will take into account factors such as the effect of New Zealand's international obligations to APEC, the WTO and bilaterally; industry efficiency; regional and industry development; the labour market and social consequences of tariff policy; as well as the effects of tariffs on consumers and exporters. (Refer to paragraph 7 of the Terms of Reference for further detail.)
The Tariff Review is being undertaken now to provide certainty for business, and allow a reasonable lead in time, should changes to tariff policy be proposed for the post-July 2005 era.
New Zealand's Current Tariff Profile and Policy
Approximately 95 percent of imports (by value) enter New Zealand free of duty either because the goods are not made in New Zealand (e.g. watches), or because they come from a preferential source such as Australia. Some 56 percent of import categories carry no duty. Most dutiable imports into New Zealand face relatively low tariffs - typically 5-7 percent. High tariffs are essentially limited to a small range of products including certain textile, clothing and footwear products (TCF), which currently have tariffs of up to 19 percent. Some clothing items can attract alternative specific tariffs, expressed as a fixed monetary amount per unit, which means that some very low cost clothing imports may attract tariff rates in excess of 19 percent.
New Zealand also operates a tariff concession system which allows duty free entry when it can be shown that suitable alternative goods are not made locally.
The Government decided in April 2000 to hold New Zealand's general tariffs at their July 1999 levels until July 2005. This constituted a departure from the previous Government's policy of removing all tariffs by 2006 - most by July 2001.
The Government has not, however, departed from its international commitments on tariffs, and continues to pursue liberalisation in international fora. New Zealand has continued WTO reciprocal tariff removal processes involving some key industry sectors - information technology equipment (now duty free), beer (now duty free) and paper/paper products/printed matter (by 2004.) These are reciprocal commitments, and the relevant industries perceived overall gains from the opening up of overseas markets.
The Closer Economic Partnership (CEP) with Singapore saw the removal of tariffs on all goods originating in Singapore. This agreement has brought New Zealand reciprocal benefits. CEP talks are currently being held with Hong Kong.
The Government decided to remove remaining tariffs on imports from Least Developed Countries from 1 July 2001. This move is consistent with New Zealand's, and the wider international community's broader commitment to assist these countries.
Assessing the Impact of Tariffs
As part of the Review, the Government will consider the employment and economic impacts of maintaining current tariffs and any possible changes. This will be wide ranging and will encompass the impacts on:
- Industry, especially firms and industries which are sensitive to tariffs (e.g. those which compete with imports, or which use production inputs and capital equipment with a high imported component)
- Employees
- Regions
- Consumers
- Maori, Pacific Island peoples, women and low-income households, both as employees and consumers
In particular, industries, regions and groups of people where tariffs have a significant impact will be identified, and their prospects under different tariff scenarios considered.
The assessment will also cover the impacts of tariffs on broader economic, industry and regional development. This is to ensure that tariff policy is contributing positively to the objectives established in the Growing an Innovative New Zealand Strategy (recently announced by the Prime Minister) to return New Zealand's per capita income to levels above the OECD average. In particular, the assessment will cover the contribution of tariffs to building a base of dynamic, competitive firms and industries in New Zealand, any impacts on specific industry and regional strategies, and the resulting effects on economic growth.
The Government is clear that its decisions about tariffs will be based on solid information about likely effects, not theoretical policy prescriptions.
The Trans-Tasman Context
Australia is New Zealand's major export destination for manufactured goods. Ensuring New Zealand's ability to remain competitive in the Australian market will be an important issue for consideration in the Tariff Review. Given our preferential duty free access under CER, what happens in Australia, especially in terms of tariff decisions, will have a significant impact on New Zealand industry. Any further reductions in Australia's tariffs will reduce the significant competitive advantage that many New Zealand producers currently have in the Australian market. For example, TCF tariffs in Australia are as high as 25%. Once these are significantly reduced, or removed, the New Zealand TCF sector will face an increasingly competitive Australian market.
The Wider International Context
The World Trade Organisation (WTO)
The November WTO Ministerial Conference in Doha agreed to begin negotiations on tariffs for both agricultural and non-agricultural goods. The effect of these negotiations on actual applied tariffs in New Zealand is unclear, but any reductions would be consistent with the Government's current emphasis on gaining reciprocal benefit. As already noted, New Zealand is continuing its commitment to its existing WTO reciprocal tariff removal processes on IT equipment, beer, and pulp and paper.
Asia Pacific Economic Cooperation (APEC)
APEC began as an informal Ministerial-level dialogue. It now comprises 21 member economies, including New Zealand (and three observers.) APEC has established itself as the primary regional vehicle for promoting open trade and practical economic and technical co-operation.
The primary goal of APEC is to advance economic dynamism and sense of community within the Asia-Pacific region.
In 1994 at Bogor, APEC leaders adopted the goals of: "free and open trade and investment in the Asia-Pacific by 2010 for developed member economies and 2020 for developing ones". These have become known as the Bogor goals.
New Zealand, with likeminded APEC members, is maintaining the pressure for the Bogor goals to be fully achieved by all APEC members by the target dates.
Submissions
See Post-2005 Tariff Review - Submissions.
Contact
Those interested in participating in the Tariff Review's consultation process should register their interest with the Ministry of Economic Development:
Graeme Horne, Regulatory and Competition Policy Branch, Ministry of Economic Development, 33 Bowen Street, PO Box 1473, Wellington. Tel. 04-470 2359; Fax. 04-499 1791; Email. graeme.horne@med.govt.nz
Graham Webb, Regulatory and Competition Policy Branch, Ministry of Economic Development, 33 Bowen Street, PO Box 1473, Wellington. Tel. 04-474 2676; Fax. 04-499 1791; Email. graham.webb@med.govt.nz
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