On December 31, 2023, the special safeguard measures on milk powder that signed as part of China-New Zealand Free Trade Agreement expired, which means that all dairy products from New Zealand can enter into China without duty.

With the protective tariffs on milk powder expiring on December 31, 2023, all New Zealand dairy products can now enter China without duty starting from January 1, 2024, marking the full completion of the phased tariff reductions agreed in the free trade agreement.

In 2008, New Zealand became the first developed country that signed free trade agreement with China. As per the agreement, the tariffs on various dairy products imported by China from New Zealand would decrease year by year and eventually reduced to zero in 2019. However, special safeguard measures were set for milk powder, liquid milk, butter and cheese. Once the import volume exceeds the trigger level, the preferential agreement tariff will no longer apply. Instead, most favored nation tariff rates, which is over 10%, will be restored. Among them, China's safeguard measures for fresh milk, butter and cheese products ended in 2021, while that for milk powder lasted until the end of 2023.

Absolutely it is good news for New Zealand dairy stakeholders. According to Reuters, in the past three years, New Zealand exported an average of 1.4 million tons of dairy to China annually, worth approximately NZ$ 8 billion. New Zealand government data showcased that nearly half of them were milk powder. "The removal of these remaining tariffs is expected to deliver additional annual tariff savings of approximately NZ$350 million ($221 million)," said Trade Minister Todd McClay.

According to independent dairy analyst Song Liang, the affected milk powder is mostly used as raw material by Chinese dairy producers. In the future, more countries and regions may have such tariff exemption policy, leading to the cost reduction of raw materials for Chinese dairy enterprises. This may further boost China's domestic dairy industry by improving manufacturers' production initiatives.

Source: Chemlinked

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