John Key travelled to Seoul last weekend to sign a free trade agreement (FTA) with South Korea. At the moment most New Zealand exports to South Korea have large tariffs added. Our beef has a 40% tariff, kiwifruit 45% and butter 89%. This makes our products very expensive to Korean consumers. Food from other countries which have a free trade agreement with Korea, is cheaper. One example is Chile. Our kiwifruit compete with kiwifruit from Chile which has the same growing season as us but Chile does not have to pay 45% tariff.
The agreement also increases the number of working holiday visas for young Koreans from 1800 to 3,000. Some training programmes for young Koreans in New Zealand are included in the agreement.
Most of the tariffs will not disappear immediately. Tariffs on beef will gradually reduce over the next 15 years while those on kiwifruit will reduce more quickly – in just 6 years.
However, not all New Zealand exporters are happy with the agreement. Exporters of seafood, which currently has a 22% tariff, say that frozen squid will still keep the same tariff although mussels and salmon will be part of the FTA. The tariff on frozen deer velvet will remain although unprocessed deer velvet will not have a tariff.
The wine industry should be happy. Tariffs on our wine will disappear immediately.
South Korea is our 6th largest export market, bringing about $4 billion to our economy.
Listen to July 23rd 2013 to hear more about our relationship with South Korea.
Vocabulary
• tariff – tax on imports into a country, import duty
• currently – right now
• deer velvet – deer antlers, often added to medicine
Note: some words do not usually have a plural form e.g. beef, food, kiwifruit, squid, fish, salmon