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Limited benefits for wood products in Korean FTA

The Wood Council of NZ (Woodco) said tariffs would continue to restrict trade in processed wood products despite the signing of a FTA with South Korea. Source: Timberbiz

“We know how hard Government negotiators have strived to achieve a high quality deal with Korea. For the forest industry the job is far from finished, but the proposed agreement is a good start,” said Woodco chair Bill McCallum.

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Woodco chair Mr Bill McCallum

Woodco is the pan-industry body representing the interests of all parts of the forest and wood processing value-chain.

New Zealand exported NZ$503 million of forestry products to Korea in the year ending June 2014.

Under the FTA more than 99% of New Zealand’s current export wood product lines will be duty-free within 10 years.

“But 10 years is a long time in business and while a 10 per cent tariff may not sound significant, on price-sensitive products it can be enough to eliminate trade,” said Mr McCallum.

“This is compounded by the fact that some other wood exporting countries already enjoy tariff-free entry into Korea.”

Mr McCallum said the forestry and wood processing industries on a “business as usual” basis would deliver NZ$6 billion a year in export earnings to New Zealand by 2022.

“The vision in the Woodco Strategic Action Plan is to double this to NZ$12 billion over the same period, largely by converting a higher proportion of logs to higher value products for sale locally and on world markets,” he said.

“But we can’t do this alone. Only the Government can negotiate the tariff-free access we need to compete. Tariffs are generally very low on logs and escalate as value is added – effectively shutting our processed wood products out of many markets.”

He said that free trade agreements between New Zealand and other countries have tended to headline the benefits for dairy, meat and horticultural exports.

“While we welcome the gains the farming sector has achieved, we do encourage greater priority be given to improved access for forest products,” said Mr McCallum.

“We are currently the country’s third largest export industry, but the industry’s common objective is to substantially increase the proportion of wood products that add value on-shore.

“Think of the potential for employment, regional development and national wealth creation that would result from processing more logs into value-added products. We urge our trade negotiators to work hard to achieve elimination of tariffs on all processed wood products.”