Trade bodies in New Zealand have welcomed the “upgrade” of a free trade agreement with China, saying the enhanced pact will help boost trade between the two countries.
Catherine Beard, executive director of Export New Zealand, an exporter advocacy and lobby group, said New Zealand and China had both benefited greatly from their years-long FTA and the current upgrade will improve the flow of goods further by reducing compliance costs and barriers.
“It also adds in … better access to some services trade, such as environmental services, airport operations, and audio visual,” she said.
“New chapters reflect new ways of working, including in e-commerce, trade and the environment and procurement,” Beard added.
On Jan 26, China and New Zealand upgraded their 12-year-old FTA, showing their commitment to multilateralism and free trade.
Damien O’Connor, New Zealand’s minister for trade and export growth, signed the upgrade in a virtual ceremony with Wang Wentao, China’s minister of commerce.
In a statement, O’Connor said the upgrade brings the agreement, signed in 2008, up to date for at least another 10 years.
China is New Zealand’s largest trading partner, with two-way goods and services trade now exceeding US$32 billion a year.
The FTA upgrade adds new chapters on e-commerce, environment and trade, competition policy and government procurement, in addition to improvements on customs procedures and cooperation, rules of origin and technical barriers to trade.
China will broaden market access for New Zealand’s wood and paper products with some tariffs eliminated. It also will expand opening-up in some service industries such as aviation, education, finance and elder care on the basis of the Regional Comprehensive Economic Partnership, which was signed by 15 countries, including China and New Zealand, in November.
New Zealand, meanwhile, will reduce investment barriers for Chinese investors, granting them the same review threshold treatment as members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
The upgrade will ensure most of New Zealand’s US$3 billion wood and paper trade to China will be tariff-free.
The initiative marks “the most ambitious trade and environment chapter and the highest level of commitment that China has agreed in any FTA”, O’Connor said.
All safeguard tariffs in dairy are set to be eliminated within one year for most products, and three years for milk powder. “This means that by January 1, 2024, all New Zealand dairy exports to China will be tariff-free,” O’Connor said.
At the Chinese border, there will be an expedited six-hour “clearance time” for perishable goods such as seafood. Exporters will have key staff they can contact at Chinese ports to iron out any issues.
Wang said the signing of the upgrade was “another milestone” in cooperation between China and New Zealand.
The New Zealand China Council welcomed the FTA upgrade, terming it as “positive news” for New Zealand’s exporters amid ongoing global uncertainty. The Council’s chairman Don McKinnon, said the upgraded agreement will contribute strongly to New Zealand’s economic recovery from COVID-19 and highlights the value of “our steady and constructive relationship with China”.
Philip Gregan, chairman of New Zealand International Business Forum, said the FTA upgrade shows “trade liberalization is still possible”.
Yang Zhengwei, deputy director-general of the Department of International Trade and Economic Affairs at China’s Commerce Ministry, said the upgrade marks another achievement under China’s goal of building a high-standard FTA network.
“The upgrade has set some of the highest standards among China’s FTAs in promotion of trade and investment facilitation,” said Tu Xinquan, dean of the China Institute for WTO Studies at the University of International Business and Economics in Beijing.
Liu Zhihua contributed to this story.
