NZ-China free trade agreement

When Prime Minister Helen Clark and Chinese counterpart Premier Wen Jiabao witnessed the signing of the historic free trade agreement (FTA) between New Zealand and China, they started a process which will result in the elimination of tariffs on 96% of New Zealand exports to China. It is estimated that the FTA will lift New Zealand’s export revenue from China by between NZ$225 to NZ$350 million every year.

Helen Clark said: “The signing of this agreement is a very significant achievement for New Zealand. It opens up new opportunities for businesses looking to engage with, or grow their existing links with, China. It will facilitate goods and services trade, and investment.

“Overall, the FTA reduces barriers to our trade with China. It promotes cooperation in a broad range of economic areas, and also provides a platform for further engagement at the governmental, cultural and people-to-people levels.”

A dedicated website containing more information about the FTA can be found at www.ChinaFTA.govt.nz. The website contains the full text of the agreement and a detailed guide to it. It features tools to assist New Zealand and Chinese businesses to take advantage of the FTA.

Dairy response

The Dairy Companies Association of New Zealand (DCANZ) has applauded moves to reduce tariffs to zero on imported dairy products into China as part of the New Zealand–China Free Trade Agreement.

DCANZ chairman Earl Rattray said New Zealand dairy exporters would benefit in the long term from improved access to a rapidly growing consumer and ingredients market.

“Our initial understanding of the agreement indicates the tariffs on dairy products will gradually be reduced to zero over timeframes of between five and 12 years.

“While it is too early to quantify those benefits without seeing the specifics of the text, there will advantages for dairy exporters in terms of reduced tariffs, easier access to the China market and a head start on other dairy-exporting nations seeking to leverage the rapid growth in dairy consumption in China.”

Mr Rattray congratulated the New Zealand government on being the first developed nation to secure a free trade agreement with China.

“The agreement puts New Zealand exporters in a strong position to leverage China’s emergence as one of the world’s top economies and consumer markets.”

Seafood response

The signing of an FTA with China will create further market development opportunities for the New Zealand seafood industry, says New Zealand Seafood Industry Council’s general manager of trade, Alastair Macfarlane.

“The ability to trade more freely and actively with China is welcome. China takes close to 10% of NZ seafood exports by value, which was around NZ$117 million in 2007. This is an important market for us,” Mr Macfarlane said.

When you include exports of seafood to Hong Kong, including live rock lobster, that total exports figure is over NZ$250 million, he said.

A large proportion of seafood exports to Hong Kong is consumed in China, particularly rock lobster and paua (as canned abalone). When sales to China through Hong Kong are added to direct exports to China, it makes it one of the top three markets for New Zealand seafood exports, alongside the European Union and Australia, Mr Macfarlane says.

“China has become an important provider of seafood processing services to New Zealand seafood companies. A large proportion of the finfish and squid exported to China is further processed there and re-exported to markets in North America, Japan and Europe.”

Seafood exports to China for consumption in China have attracted tariffs of over 10%. The FTA will lead to removal of those tariffs over time. High-value live and chilled products will expand accordingly.

China is also the leading source of imported seafood products into New Zealand — particularly of processed, canned and frozen seafood items including shrimps, scallops and mussels. Chinese seafood product enters the New Zealand market tariff free.