New Zealand says China’s safeguard duties on milk powder over

SYDNEY (Reuters) – New Zealand said on Monday all its dairy products were now able to enter China duty-free as safeguard duties on milk powder ended on Dec. 31, marking the removal of all remaining tariffs agreed upon in the free trade deal between the two countries.

New Zealand was the first developed country to sign a free trade agreement with China in 2008, with the imports of milk powder subjected to the longest phase-out. An upgraded trade deal was entered when former Prime Minister Jacinda Ardern met President Xi Jinping in 2022.

“This is good news for our dairy sector. The removal of these remaining tariffs is expected to deliver additional annual tariff savings of approximately NZ$350 million ($221 million),” Trade Minister Todd McClay said in a statement.

“The (free trade agreement) continues to deliver benefit to the New Zealand economy and to underpin the New Zealand-China trade relationship.”

China is New Zealand’s largest trading partner, with two-way trade exceeding NZ$37 billion ($23.40 billion) in 2021. Annual dairy exports to China have averaged 1.4 million tonnes, worth about NZ$8 billion each year over the past three years, around half of which was milk powder, official data showed.

Safeguard duties are emergency tariffs that countries use to shield domestic industries against intense competition from a sudden surge in imports of a particular product.

The so-called special agricultural safeguards mechanism in the free trade deal was designed as a temporary measure. The tariff preferences are applied up to a designated volume and China’s standard tariff applied to imports above the safeguard trigger.

Safeguards duties on milk and cream, butter, and cheese ended in 2021, while those on milk powders ended on Dec. 31, 2023.

($1 = 1.5815 New Zealand dollars)

(Reporting by Renju Jose in Sydney; Editing by Diane Craft)