Beijing envoy in NZ to open talks on trade

By FRAN O'SULLIVAN Assistant editor

One of Beijing's most powerful women, Vice-Commerce Minister Ma Xiuhong, will today open "talks about trade" in Wellington that may ultimately set the course for a free-trade deal between New Zealand and China.

The talks coincide with a signal from New Zealand that it is prepared to support China's view that it should not have to take on extra obligations in the present round of World Trade Organisation negotiations.

Officials from both countries have cautiously described today's talks - which will focus on parameters for an initial Trade and Economic Co-operation Framework between the two countries - as "scoping discussions".

Chinese President Hu Jintao and Prime Minister Helen Clark unveiled the framework proposal during Hu's visit to New Zealand last October.

Trade Negotiations Minister Jim Sutton - who said the Chinese "seem prepared to work on a short timeframe" - hopes the framework will be signed this year, before formal negotiations on a free-trade deal.

"The Chinese are being very constructive and positive about it - if they wanted to be very cautious it could take forever," he said.

Ma and a team of nine high-level officials spent the weekend in Auckland and will visit a South Island farm before flying to Sydney for discussions on Friday toward a free-trade deal with Australia, which is the first Western nation to open such talks with China.

Chinese Ambassador Chen Mingming said the timing of Ma's visit, "so early in the year", showed that the Chinese Government took this issue very seriously.

'The really important thing is the agreement reached by the Chinese President and the New Zealand Prime Minister," said Chen.

"This will kick off a process which will eventually lead to the forming of a closer partnership between our two countries."

But Chen cautioned realism on New Zealand's part. He said Sutton's timeframe was optimistic and "it may involve a lot of work".

"The immediate issue is for each side to get a clear idea of the position of the other side - I assume it will take quite a few rounds of talks before substantive progress can be made.

"If the New Zealand Government pursues the issue with real vigour, there could be a possibility for both sides to reach agreement.

"We will find out after the first round of formal talks."

Richard Grant, deputy secretary at the Ministry of Foreign Affairs and Trade, will lead the high-powered New Zealand team. It is expected to include Iain Rennie from the Treasury as well as officials from the Ministries of Economic Development and Agriculture.

Officials are expected to take the opportunity to discuss the stalled WTO talks.

A "mini-ministerial" meeting - the first since talks failed in Cancun last September - is set to take place on the outskirts of the World Economic Forum in Davos this month.

China was a leader in the formation of the G21 group of developing nations which scuttled a joint proposal by the European Union and the United States before Cancun.

"China has largely been breathing through its nose in the WTO - they are relatively new members still," said Sutton.

"They had an enormous volume of adjustments to make to comply with the undertakings they gave as they joined, and some of those undertakings are causing them some discomfort.

"So the major position they have been taking in the multilateral negotiation is to remind people that newly acceded members who have undertaken an extensive range of commitments to attain membership shouldn't be expected to take on a huge range of additional obligations as part of the round.

"Personally I think that is a very fair point."

Sutton has indicated that although New Zealand is "reasonably hard-nosed", it is "perfectly happy to see [China] accommodated in the negotiation".

Complicating today's talks is the free-trade deal between China and Hong Kong that took effect on January 1. Under the closer economic partnership arrangement, companies based in Hong Kong receive preferential access to the mainland.

New Zealand's own drive for a trade deal with Hong Kong stalled last year over how to apply effective rules of origin.