China deal gives US beef an edge over NZ producers

Grass-fed New Zealand beef was competing in a different part of the market from US beef. Photo / 123RF

A range of import restrictions affecting New Zealand beef exporters to China will be swept away for their American competitors as part of the new "phase one" US-China trade deal signed in Washington DC on Wednesday.

However, US producers will continue to face tariffs on beef as high as 47 per cent while New Zealand beef exports enter the Chinese market duty-free under the free trade agreement in place since 2008, according to initial analysis of the deal by the Meat Industry Association. Details were still emerging, but newly appointed MIA chief executive Sirma Karapeeva told BusinessDesk there was no suggestion "that I can see" that New Zealand lost its tariff advantage over US exporters to China.

"But on the [administrative side] it looks like they are streamlining systems and leapfrogging where countries like New Zealand are at."

Of particular significance is China's decision to allow American beef containing some level of hormone growth promotants to be imported, reversing the current ban.

"Given the widespread use of HGPs in US beef production, this development has the potential to significantly increase US beef exports to China," said Karapeeva. However, full detail has yet to emerge, including a start date for the new US-China pact, whose wider effect has been to calm global trade and financial markets, which had become highly focused on the simmering trade war between the two major powers.

Grass-fed New Zealand beef was also competing in a different part of the market from US beef, which is mostly grain-fed, said Karapeeva.

The New Zealand product was "likely to continue to resonate with Chinese consumers looking for a premium, natural, safe product. New Zealand also has tariff-free access for beef into China under the NZ-China FTA, compared to tariffs of up to 47 per cent for US beef."

That said, US producers would benefit from the removal for their products of "some 50-odd technical measures on US farm goods such as beef, pork, poultry, seafood, dairy, rice, potato and petfoods", including removal of restrictions on animals' age, use of veterinary drugs, traceability and product scope.

A backlog of applications by US processing facilities for approval from Chinese authorities to export "has the potential to open up the China market to more US facilities", while New Zealand had been waiting for approvals relating to additional chilled meat plant listings since the completion of a trial in 2018.

That delay had "curtailed the opportunities in the China market for a number of New Zealand meat companies as they are not able to compete on a level playing field," said Karapeeva.