Liberalising trade in goods

The ASEAN FTA aims to reduce barriers to trade in goods, most notably through the elimination of tariffs on almost all of New Zealand's current exports to ASEAN.

Full details of the changes to tariffs and the timetables for these changes are set out in the schedule to the ASEAN FTA. The tariff schedule and a tariff finder tool are located on this website.

A step-by-step practical guide for businesses exporting goods under the ASEAN FTA is set out in Appendix 1 of this Guide.

Opening up ASEAN's markets

New Zealand will benefit from the eventual elimination of tariffs on 99 percent of New Zealand's current exports to the four key ASEAN markets of Indonesia, Malaysia, the Philippines and Viet Nam, which on full implementation will equate to an annual duty saving of approximately $50 million based on current trade.

This tariff elimination will deliver significant benefits to exporters, including the removal of tariffs:

• in 2010 on $429 million of current exports to Indonesia, Malaysia and the Philippines encompassing, in some markets, butter, milk powder, cheese, wool, kiwifruit, apples and some manufactured products. This covers 28 percent of total current exports to Indonesia, Malaysia, the Philippines and Viet Nam. When the exports that already enter these markets duty free are taken into account, 70 percent of New Zealand's total current exports will enter these markets duty free in 2010.
• between 2011-2015 on $60 million of current exports to Indonesia, Malaysia and the Philippines encompassing, in some markets, beef, wine, kiwifruit, apples, onions, aluminium, certain iron and steel products and some manufactured products. This covers 4 percent of New Zealand's total current exports to Indonesia, Malaysia, the Philippines and Viet Nam. By 2015, 74 percent of total current exports to these markets will be duty free.
• in 2016 on $137 million of current exports to Viet Nam encompassing milk powder, some paper and wood products, apples, kiwifruit and sheepmeat. This accounts for 9 percent of New Zealand's total current exports to Indonesia, Malaysia, the Philippines and Viet Nam. By 2016, 83 percent of total current exports to these markets will be duty free.
• between 2017-2020 on $238 million of current exports to Indonesia, Malaysia, the Philippines and Viet Nam encompassing, in some markets, butter, liquid milk and cream, frozen French fries, beef and beef offal. This covers 16 percent of New Zealand's total current exports to Indonesia, Malaysia, the Philippines and Viet Nam. By 2020, 99 percent of total current exports to these markets will be duty free. (Only one percent of New Zealand's total current exports to Indonesia, Malaysia, the Philippines and Viet Nam will remain subject to tariffs in 2020).

Table 1: Key markey summary of outcomes

	Indonesia		Viet Nam		Philippines		Malaysia
	% of Trade Duty Free	Key Products Duty Free	% of Trade Duty Free	Key Products Duty Free	% of Trade Duty Free	Key Products Duty Free	% of Trade Duty Free	Key Products Duty Free
Already Duty Free	36.3%	Pet food, woodpulp, logs, paper, scrap metal	27.6%	Logs and sawn timber, furskins and hides	1.9%	Circuit boards, pulp wood	82.9%	Milk powder, beef, scrap metal, casein, fish fillets, woodpulp, cream
Entry into force	36.3%		27.6%		2.0%	Some footwear, some automotive parts	89.0%	Butter, cheese, ghee, honey, fruit juice, canned paua
2010	63.8%	Whole milk powder, cheese, butter, wool, paper and paperboard, apples, kiwifruit, navigational equipment, frozen vegetables	27.6%		74.1%	Casein, milk powder, cheese, butter milk, some forestry products	92.1%	Paper, apples, tallow, machine parts, icecream,
2011	63.8%		27.6%		77.9%	Some dairy and forestry products, kiwifruit, apples	95.5%	Paper,  sweetcorn, beans, fruit juice
2012	64.3%	Static convertors, airconditioners, locks, aluminium, toys	27.6%		80.1%	Beef, frozen french fries, toys	97.2%	Electrical parts, fibreboard, kiwfruit, chocolate
2013	64.3%	Soap, jewellery, refrigerators	27.6%		81.5%	Some forestry products, bath fittings	97.3%	Some iron and steel products, paper
2014	64.4%	Kitchen and bath fittings (e.g baths and sinks), barbed wire	27.6%		81.5%		97.3%
2015	64.5%	Aluminium, steel and plastics	27.6%		82.4%	Wine,salt	97.3%
2016	64.5%		83.3%	Whole and skim milk powder, butter fat, some paper and wood products, apples, kiwfruit, sheepmeat	82.4%		97.9%
2017	66.4%	Frozen french fries, whey, butter oil	86.8%	Butter, liquid milk and cream, paper products, cheese, whey, aluminium	89.7%	Some pulp and paper products	97.9%
2018	66.8%	Liquid cream	88.4%	Beef, salmon, magarine, ice-cream, wood	89.7%		97.9%
2019	86.6%	Unsweetened skim milk powder, some whole milk products	91.4%	Some dairy products (including casein and buttermilk), avocados, fruit juice	99.6%	Liquid milk, butter, cheese, beef offal	97.9%
2020	98.6%	Beef, beef offal, chocolate	98.8%	Butter oil, particle board, paper, airconditioners, whiteware	99.6%		98.9%	Newsprint, plastics, paints, whiteware
2021	98.6%		98.8%		99.6%		98.9%
2022	98.6%		98.8%		99.6%		98.9%
2023	98.6%	Apple juice, jam	98.8%		99.6%		98.9%
2024	98.6%		98.8%		99.6%		98.9%
2025	98.6%		98.8%		99.6%		98.9%
Not Subject to Elimination	1.4%	Sheepmeat and some meat of lesser export significance, frozen fish fillets, alcohol, some forms of dairy products, avocados, honey	1.2%	Steel, wine, seafood (including frozen fish fillets)	0.4%	Onions, goat meat, and some steel, plastic and machinery products	1.1%	Poultry, steel, wine, liquid milk

back to top

Key sectoral outcomes

Dairy

Tariffs on key products will be eliminated at various stages between 2010 and 2020. Examples of exports on which tariffs will be eliminated by 2010 are butter and cheese in Indonesia; and casein, milk powder, cheese and butter milk in the Philippines. These products face tariffs of up to 5 percent. Examples of products with later elimination dates include unsweetened skim milk powder in Indonesia; casein, butter milk, and butter oil in Viet Nam; liquid milk, butter and some cheese in the Philippines.

Meat

Tariffs on key beef exports will be eliminated between 2012 (Philippines) and 2020 (Indonesia). Tariffs on sheep meat will be eliminated in 2010 for Philippines, 2016 for Viet Nam; whereas the prevailing tariff rate will apply for some sheep meat in Indonesia.

Forestry

Tariffs on key products will be eliminated at various points between 2010 and 2020. Examples of products that will be eliminated by 2010 include fibreboard and some paper for Indonesia and less processed wood products for the Philippines.Examples of products that will be subject to later tariff elimination include plywood and major paper exports to the Philippines (where tariffs will be eliminated in 2017), newsprint for Malaysia (where tariffs will be eliminated in 2020) and some paper and particle board for Viet Nam (where tariffs will be eliminated in 2020).

Horticulture

Tariffs are eliminated on a wide variety of horticulture products, with some globally significant exports subject to early elimination. Tariffs on apples and kiwifruit for instance will be in eliminated in 2010 (Indonesia, Malaysia - apples), 2011 (Philippines), 2012 (Malaysia – kiwifruit) and 2016 (Viet Nam). Tariffs on onions will be eliminated by 2010 for Indonesia, and will be reduced from 40 percent to 5 percent in the Philippines, by 2018.

Manufactured Goods

A key benefit of the ASEAN FTA for manufacturers is that ‘Rules of Origin' can be met on a regional basis. This means that New Zealand manufacturers will benefit through both improved direct access and also through the ability to include New Zealand materials in the origin assessment of goods manufactured and traded within the region by Australia and the ASEAN manufacturers and exporters. This will allow New Zealand manufacturers to better integrate themselves into regional supply chains.

Examples of manufactured products subject to relatively early elimination include navigational equipment, electrical static converters, air conditioners, commercial refrigerators, toys, road sign equipment and switch board equipment. Tariffs on these products (which can be as high as 15 percent) will be reduced and eliminated between 2010 and 2013, in one or more of New Zealand's key markets (Indonesia, Philippines, Viet Nam and Malaysia).

Table 2: New Zealand's top ten exports to ASEAN (Year ended Dec 10)

Product	Export value (NZ$ M)	% total exports
Milk powder	1,412.7	32%
Butter	360.0	8%
Frozen beef	227.0	5%
Malt extract	180.3	4%
Cheese	157.5	4%
Timber, sawn or chipped	143.8	3%
Petroleum oils, crude	122.2	3%
Buttermilk	112.3	3%
Chemical wood pulp	109.7	3%
Fresh milk	82.4	2%
Subtotal top ten exports	2,908.0
Total exports	4,386.5

Data Source: Statistics New Zealand

back to top

Opening up New Zealand's market

The ASEAN FTA provides ASEAN economies with improved access to the New Zealand market, but at the same time ensures adequate time for New Zealand's sensitive sectors to adjust to tariff reductions such as, clothing, footwear, carpets, some textiles and some manufactured products such as steel and plasterboard.

In broad terms, New Zealand's offer follows a similar structure to the offers of Australia and ASEAN countries in the context of the ASEAN FTA, with 90 percent of tariff lines contained in a "normal track" (with elimination between entry into force and 2012) and 10 percent of lines in a "sensitive track" with tariffs to be eliminated between 2013 and 2020.

The most significant years for tariff elimination are:

• Entry into force (80 percent of lines).
• 2010 (a further 5 percent).
• 2012 (5 percent).
• 2017 (6 percent).
• 2020 (4 percent).

Tariffs on a small number of tariff lines are eliminated each year between 2013 and 2019.

The structure of the New Zealand offer and the effect on Indonesian, Malaysian, Filipino and Viet Namese trade is set out in Table 3.

The phase-out of tariffs on New Zealand imports has advantages for New Zealand. New Zealand's economy is dependent on imports in order to supply a range of goods and services. Consumers will benefit directly from cheaper products. Cheaper imports of equipment and machinery, which account for 31 percent of New Zealand's imports from ASEAN, are expected to have benefits for New Zealand manufacturers, including through reductions in prices and enhanced competition with other imported products (eg from China).

Table 3: Structure of New Zealand offer

	Percentage of Tariff Lines	Key Products Becoming Duty Free	Percentage of Trade Duty Free
			Indonesia	Malaysia	Philippines	Viet Nam
Already Duty Free	58.6%		78.5%	77.9%	76.8%	26.4%
2009	79.8%	Plastics, rubber (excluding new car tyres), wood, glass fibres, manufactures, some food products	78.8%	83.3%	80.4%	28.4%
2010	84.7%	Plastic, rubber, manufactures	80.0%	86.6%	82.9%	32.4%
2011	84.7%	Nil	80.0%	86.6%	82.9%	32.4%
2012	90.0%	Plastics, wood, yarn, certain fabrics, some iron or steel products, glass wool insulation, refrigerators, tug boats, mattresses, upholstered seats with wooden frames	81.1%	91.9%	88.1%	39.2%
2013	90.3%	Some metal furniture, bicycles	82.0%	92.4%	91.3%	51.1%
2014	90.3%	Some iron and steel bars and rods	82.0%	92.4%	91.3%	51.1%
2015	90.3%	Saddles and harnesses	82.0%	92.4%	91.3%	51.7%
2016	90.4%	Very narrow range of fabrics	82.3%	92.4%	91.3%	52.0%
2017	96.5%	Fabrics, carpets, clothing, footwear, some iron or steel, new car tyres	83.9%	93.4%	94.6%	54.5%
2018	96.7%	Footwear	85.0%	93.4%	94.7%	65.6%
2019	96.8%	Wooden furniture	87.2%	95.5%	95.5%	92.0%
2020	100.0%	Some: Clothing, plastics and wood, chemicals, iron and steel, food products	100.0%	100.0%	100.0%	100.0%

back to top

---