Free trade talks with China set to resume

The next round of negotiations on a free trade agreement (FTA) with China would be held in New Zealand in May, prime minister Helen Clark said today.

Chinese president Hu Jintao and Helen Clark launched negotiations for a FTA last November.

Negotiations with China officials were held in Beijing in December and the prime minister said a second round of talks took place earlier this month, also in Beijing.
The next round of talks would be in New Zealand in May, she said.

It was not possible to predict how long the negotiations would take.

"I do believe, however, that at the highest political levels China both wants an outcome and knows that New Zealand requires that outcome to be comprehensive, forward looking and of a high standard," she said in prepared speech notes to Auckland Rotary Club.

Helen Clark said New Zealand's future prosperity would depend on the quality of its international linkages. It needed to be involved in the international trade in goods and services, and in attracting investment, people, new ideas and technology.

"China is going to be central to developments in the world economy. That is why we have put great emphasis on our links with China, including an FTA."

China's current growth rates would put it on course to become the world's second largest economy by the year 2020.

Even now, there were around 100 million Chinese who could be classified as middle class.

"That is a considerable market for New Zealand to tap and it will be much larger by 2020 if China achieves its aim of doubling its per capital GDP by then."

China's already highly competitive market was likely to become even more competitive in the next 10 to 20 years. New Zealand would need to work harder and smarter to maintain and grow trade and investment levels, the prime minister said.

New Zealand exports to China had risen by on average $100 million a year from $1.3 billion to $1.7b over the past four years.

It was New Zealand's fourth largest market with two-way trade at more than $5b.

"An FTA with China would build on an already important relationship for us. For China, an FTA with New Zealand's open, developed market economy would also be important in consolidating international perceptions of China's own status as a market economy. Concluding an FTA with New Zealand would allow China to say to the world that it can deal with open market economies," Helen Clark said.

It was estimated that New Zealand's exports to China would grow by between $260m and $400m a year more than the level which would be achieved without the removal of trade barriers.

Removal of tariffs on New Zealand's exports would provide significant benefits. China's average tariff rate last year was 9.5 per cent and average duties of more than 15 per cent were paid on agricultural products including a 10 per cent tariff on milk products, a 15 per cent tariff on sheep meat and a 20 per cent tariff on kiwifruit.

But China's non-tariff barriers probably had an even more significant effect on trade. Import licensing, customs evaluation, pre-shipment inspection, technical regulations, and sanitary and phyto-sanitary measures all caused problems for exporters.

For instance, foreign flagged ships appeared to face higher handling charges than Chinese flagged vessels.

It had been suggested that sometimes New Zealand goods faced compulsory inspection or re-testing when there was no obvious need for it.

Some exports required Chinese labelling on products before goods arrived in China when it could be much cheaper to have labels added on arrival by the Chinese importer.

- NZPA