China trade deal gets ‘significant’ upgrade
New Zealand goods will get faster access to Chinese markets, while tariffs on various paper and wood products will be reduced under a new deal with China.
The update to the New Zealand-China Free Trade Agreement – announced by Prime Minister Jacinda Ardern after meeting with Chinese Premier Li Keqiang at the East Asia Summit in Bangkok – concludes three years of negotiations by the Government.
As Ardern was delivering her opening remarks on the new deal during a bilateral meeting with China, the unusually animated Li interrupted saying that, ‘‘New Zealand has a competitive edge on many areas and you enjoy a surplus with us, we stand ready to have fair trade with you, fair competition with you.’’
Li’s remarks refer to New Zealand’s $5.1 billion goods and services trade surplus with China. The remark was a direct rebuke to United States President Donald Trump’s trade war which rests on the notion that if a nation imports more goods and service than it exports to a country it is ‘‘losing’’ at trade.
New Zealand’s $32b two-way trade with China is expected to get a shot in the arm from the deal.
The deal comes 11 years after a free trade deal with the Communist nation was first signed by the Clark Government in 2008. The update increases the speed at which some tariffs are eliminated, and commits both countries to environmental safeguards in the production of goods, while not using them as an excuse for protectionism.
‘‘It is a significant improvement for our forestry and wood processors’’, Ardern said
Under the deal 99 per cent of New Zealand’s $3b trade in paper and wood products will get preferential access to China’s markets.
The new deal removes duties from an additional 12 wood and paper products. The value of these changes is expected to start at $36 million.
In 2018, New Zealand’s forestry exports totalled $6.4b, 48 per cent of which went to China. It accounts for about 3 per cent of New Zealand’s economy
The timetable for elimination of dairy tariffs for New Zealand products going into China remains unchanged: two years for milk products and four years for milk powder.
‘‘This means that by January 2024, New Zealand will have the best access to China for dairy products of any country,’’ Ardern said.
Under the existing free trade deal 98 per cent of all New Zealand exports to China were tarifffree. Having already made the big gains for a free trade deal, this agreement focuses on ease of doing business.
At exporter-level the deal also removes red tape and speeds customs clearance for perishable items to six hours, helping fresh food exporters get goods to market more quickly.
‘‘This is important not just for compliance but there’s a cost to delays at the border, particularly in the quality of the product,’’ Ardern said.