China trade confusion costing NZ business $90m a year

NZTE says Kiwi businesses are not fully taking advantage of tariff preferences available to them through the New Zealand-China Free Trade Agreement. Photo / Thinkstock

New Zealand businesses exporting to China are leaving over $90 million on the table by not using tariff preferences available through the New Zealand-China Free Trade Agreement, says New Zealand Trade and Enterprise.

Since the Free Trade Agreement (FTA) came into force in October 2008, bilateral trade between New Zealand and China has grown by over 50 per cent.

China now accounts for over 12 per cent of exports, making it our second biggest trading partner after Australia, according to New Zealand Trade and Enterprise (NZTE).

Kiwi businesses saved $50 million last year by making use of tariff rules under the FTA but NZTE said $90 million was still going begging.

There is no simple answer to why some companies were not maximising the use of the tariff preferences, said Kefeng Chu, NZTE director operations, China.

"There could be many reasons, for example, importers in China not making a claim or freight forwarders being unsure about what to do," Chu said.

"Some companies may find it too time-consuming."

NZTE said many businesses also appeared to be confused about the Rules of Origin (ROO) set out in the FTA.

To benefit from reduced tariffs under the FTA, products must qualify as 'originating' from either China or New Zealand.

To qualify as 'originating', a product has to meet certain standards, such as being wholly obtained or wholly produced in either China or New Zealand, or being produced entirely in either or both country.

New Zealand businesses, either here or through their partners in China, needed to better understand the rules so they could claim savings.

"Better utilisation of the tariff preferences would put more money in customers' pockets and reduce costs, making New Zealand products more competitive in China, so it's important to fully understand the implications and benefits of the FTA," Chu said.

To raise awareness of the FTA rules, two workshops are being run in Wellington and Auckland on July 2 and 4th respectively.

The workshops are being jointly run by NZTE, the Ministry of Foreign Affairs and Trade, New Zealand Customs Service and New Zealand China Trade Association.

The Auckland workshop will also feature a session by Pat English, Trade Commissioner and Consul General, who will give a market perspective on non-tariff barriers.

When the NZ-China FTA was signed in April 2008 in Beijing, it concluded a three-year negotiation process.