EU plays down impact of New Zealand-China dairy deal

By Neil Merrett

- Last updated on GMT

Related tags: Dairy, International trade

The signing of a new free trade agreement between China and New
Zealand predicted to open up numerous benefits for dairy trade will
not setback the interests of producers in Europe, according to a UK
trade association.

Dairy UK said that it did not expect the country's dairy interests to be prejudiced by the agreement, adding that the UK, as with Europe as a whole, remained predominantly focused on supplying goods to its domestic markets and was not reliant on exports. The comments follow this week's announcement by the New Zealand government that it has become the first developed country to secure a free trade deal to export a variety of goods to China, which is one of the world's fastest growing economies. A number of the country's dairy groups including major global exporters such as Fonterra have welcomed the move, which they expect to grant unprecedented access to burgeoning Chinese demand for dairy products. Asia-wide potential ​ A spokesperson for Dairy UK said that for European companies that were looking to develop export markets, China remained just one of many burgeoning markets in Asia that was recording substantial increases in demand for dairy products. They added that China itself was periodically proving to have a surplus of milk production, highlighting the volatility of current dairy prices. "As ever, the dairy industry shouldn't over focus on a single market,"​ the spokesperson added. New Zealandreaction ​ Nonetheless, Earl Rattray chairman of the Dairy Companies Association of New Zealand (DCANZ) said that the agreement, which is expected to gradually reduce tariffs for the country's dairy goods entering the Chinese market over the next five to 12 years, would be a significant benefit to its members. "While it is too early to quantify those benefits without seeing the specifics of the text, there will advantages for dairy exporters in terms of reduced tariffs, easier access to the China market, and a head start on other dairy exporting nations seeking to leverage the rapid growth in dairy consumption in China,"​ he stated. Henry van der Heyden, chairman of New Zealand-based Fonterra - a leading global exporter of dairy products - echoed these sentiments suggesting that the deal was likely to provide a lucrative new opportunity for the country's dairy processors. "From what we have seen it is clear that this deal will be good for Fonterra and for theNew Zealanddairy industry,"​ he stated. "It will significantly improve access forNew Zealandexporters, provide certainty in our trading environment going forward, and support Fonterra's strategy inChina."

Related topics: Markets, Emerging Markets

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