New Zealand's kiwifruit growers are one step closer to a more competitive situation in the South Korean market, following parliament's passage of the Tariff Amendment Bill yesterday.

The country's single desk kiwifruit marketer Zespri said the bill was a significant step towards the implementation of a free trade agreement with the East Asian nation.

The group said ratification of the FTA this year would mean a 33% reduction in tariffs on exports of New Zealand kiwifruit to South Korea for the 2016 kiwifruit season.

During 2014, Zespri growers paid around NZ$22 million in tariffs with the rate set at 45%, but under the FTA the tariff for kiwifruit would reduce to zero over the next five years.

"We congratulate all those who have worked tirelessly to achieve this result. For Zespri, the elimination of the tariff means that we will be able to offer more competitive pricing to Korean consumers and therefore maintain a competitive position in the market as well as providing greater returns to New Zealand kiwifruit growers," Zespri CEO Lain Jager said in a release.

"This is a fantastic outcome for the industry and will ensure that South Korea remains a priority market for Zespri."

He said Zespri was projecting annual sales growth of 10% in Korea during the next five years, and added the South Korea FTA followed successes from the New Zealand government in achieving tariff elimination through agreements with China and Taiwan.

"We now look forward to further progress by the government on other trade initiatives, particularly the Trans-Pacific Partnership.

"A high quality, comprehensive agreement among 12 Asia Pacific nations that eliminates tariffs will generate significant value for the New Zealand kiwifruit industry, with our tariff payment in our largest market Japan alone being around (NZ)$16 million in 2014."

New Zealand Kiwifruit Growers Inc. (NZKGI) president Neil Trebilco said the tariff reductions entailed in the FTA would lead to significant savings for growers.

"The agreement will also bring about parity with Chilean competitors who have been on a zero tariff since concluding their own Free Trade Agreement in 2004," Trebilco said.

"The duty Zespri and NZ kiwifruit growers pay to South Korea is the highest in any market that we have around the world so this is very welcome news. It will enable the industry to better compete in the market.

"It has been a long negotiation and we thank both governments for their efforts."

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