NZ wine exports face major blow after US TPP withdrawal

New Zealand wine exports could face a major blow after newly elected US president Donald Trump upended the Trans-Pacific Partnership (TPP) that would otherwise see the removal of tariff on Kiwi wines into the US market.

Donald Trump signed an executive order withdrawing the US from the TPP pact (Photo credit: Saul Loeb/AFPSource:AFP)

The 12-nation trade pact was designed to enhance economic ties among the participating countries by scrapping tariffs on most goods. It was expected to give a further boost to New Zealand’s wine exports to the US, its biggest wine destination.

In August 2015, the US had surpassed Australia to become New Zealand’s most valuable wine export market. Export value increased by 26% to NZ$430 million (US$310.9 million) in 2015.

Otago Daily Times reported that New Zealand spent about six years pursuing the 12-nation Pacific Rim trade deal, hoping to secure a “historic” trade deal with the US.

“It’s obviously a disappointment that we are not going to have improved access into those markets but we will just have to see how things develop,” New Zealand Winegrowers’ chief executive Philip Gregan told the newspaper.

It’s unknown if the remaining 11 countries would pursue a smaller-scale trade deal as the US’ withdrawal would most definitely mean the collapse of the pact, given that in order to take effect, the TPP deal needs at least six countries that account for 85% of the group’s economic output.

The TPP was signed between the US, Australia, New Zealand, Canada, Japan, Singapore, Mexico, Chile, Vietnam, Peru, Brunei and Malaysia.

Meanwhile, producers in the country’s main wine regions of Marlborough and Hawkes’ Bay are upbeat about the upcoming harvest that has the potential to be “of the highest quality,” according to the report.

The harvest in South Island’s Marlborough, which was responsible for 70% of the country’s NZ$1.6 billion (US$1.15 billion) wine exports in 2016, is largely unaffected by an earlier earthquake in the region that damaged 20% of wine storage tanks, New Zealand Winegrowers’ chief executive Philip Gregan told the newspaper.

The earthquake in November last year led to a wine loss of some 2% of Marlborough’s total annual production, the report said.

Xan Harding, vice chair of Hawke’s Bay Winegrowers Association, revealed that 2016 vintage could surpass stellar vintages of 2008, 2014 and 2015, although noting the finale quality is yet to be determined by the weather in March and April.