Officials from New Zealand and Taiwan recently announced a trade agreement that will eliminate duties on Taiwan’s beef imports from New Zealand in just two years. (The agreement is expected to enter into force Jan. 1, 2014, but this timeline is subject to each side’s ratification processes.) With Taiwan being a red-hot market for U.S. beef exports, should U.S. producers be concerned about a price advantage for New Zealand?
U.S. Meat Export Federation (USMEF) Economist Erin Borror says that while the duty reduction schedule in the Taiwan-New Zealand agreement is very aggressive, it shouldn’t have a major impact on U.S. beef exports. She notes that Taiwan’s current duty rate for most beef products is already relatively low – about 15 cents per pound, which equates to an average of 4 percent on U.S. beef cuts. She adds that much of the U.S. beef exported to Taiwan is chilled, Choice-grade product, whereas New Zealand primarily exports frozen, grass-fed beef to Taiwan.
Pork cuts from New Zealand are currently subject to a 12.5 percent duty in Taiwan. While these tariffs will be eliminated immediately upon implementation of the free trade agreement, this change is expected to have no impact on the market. New Zealand exports very little pork worldwide and is not likely to become a supplier to Taiwan, even with this price advantage.
After slumping in 2012 due to regulatory issues related to beta agonists, U.S. beef exports to Taiwan have roared back at a record pace this year. Through May, exports to Taiwan totaled 13,561 metric tons valued at $106.7 million. That’s more than double the total from a year ago, and easily exceeds the pace established in the market’s peak year of 2010.
While U.S. pork exports to Taiwan still face a zero-tolerance policy for beta agonist residues, the market has shown improvement in recent months. Exports in May were robust, pushing the year-to-date total 21 percent higher in volume (9,824 mt) and 18 percent higher in value ($21.5 million) compared to last year’s low levels.