Russian trade deal offers early gains

Photo / Dean Purcell

Free trade negotiations with Russia, Belarus and Kazakhstan are another step forward in securing the country's trading future, says New Zealand International Business Forum executive director Stephen Jacobi.

Negotiations on a free trade agreement would start early next year.

"Russia along with its Customs Union partners are emerging markets for New Zealand but there is ample scope to increase New Zealand exports of food and agricultural products and to promote two-way trade and investment," Jacobi said.

New Zealand always did best when it was the first to negotiate, he said.

"When we have to wait behind others we can be waiting a long time."

Russia has a population of 142 million people, with food imports in 2008 worth more than US$30 billion, making it the fifth biggest food import market in the world.

Catherine Beard, executive director of ExportNZ, said Russia had the 12th largest economy in the world and was a rapidly growing market.

"As far as New Zealand's more traditional exports go, as the world's fifth-largest food importer Russia is a great fit for New Zealand," Beard said.

Russia was the world's biggest importer of butter and cheese, and last year New Zealand provided more than half of the county's imported butter, she said.

"Once you remove tariffs all those volumes tend to go up considerably.

"So you've got some straightaway easy gains," she said.

"The gains that are going to take more effort on behalf of industry will be things like high-tech manufacturing and those sort of opportunities."

New Zealand looked set to be the first country in the world to have a free trade agreement with Russia, Beard said.

"I think what we've found with the China [free trade] experience too is that we do have a window by being the first to sign the FTA but that window doesn't stay open forever," she said.

"I'd urge all Kiwi companies to investigate the potential business they can gain from this latest development - [free trade agreements] are only worth something if they are used."

New Zealand had a good reputation for doing high quality free trade agreements, Beard said.

"We're not one of those country's that takes sides and so people tend to see us as a fairly honest broker."

EXPORTS TO RUSSIA

2009

* Butter - $104.7m
* Sheep meat - $21.9m
* Cheese - $14.4m
* Frozen fish - $11.6m
* Total - $187.1m

Average tarrifs

* Dairy products - 9 per cent
* Fruit, vegetables, plants - 9 per cent
* Fish, fish products - 8.2 per cent
* Wood, pulp, paper, furniture - 8.7 per cent
* Duty paid in 2008 of $28.5 million to $39.7 million