Minister sketches big free-trade picture

by DANIEL RIORDAN

A series of free-trade agreements, starting with Hong Kong, is possible once the Singapore free-trade deal is in place.

Trade Minister Jim Sutton says Hong Kong offers a superb gateway for New Zealand exporters to a Chinese market of enormous potential.

Speaking after addressing the New Zealand/China Trade Association, Mr Sutton said that at this stage China was probably "a bit too big for us to digest."

"If we're talking about a China connection, Hong Kong may be more suitable. We know they have sufficient autonomy to negotiate such matters independently, yet they're part of the Chinese nation.

"Potentially we could negotiate with them in a similar way to how we've negotiated with Singapore, towards a free-trade agreement or some form of economic partnership."

Mr Sutton stressed there had been no formal discussions with Hong Kong, but rather "exploratory approaches" between diplomats, about free trade with Hong Kong and with other countries.

"Undoubtedly, when we've got the Singapore [agreement] nailed down and Parliament has hopefully expressed its overwhelming approval for it, we can start firming up some of these approaches."

Mr Sutton also quoted figures from a new study of the benefits to New Zealand from China's commitment to reducing tariffs once it enters the World Trade Organisation.

The cuts will save Kiwi exporters of non-wool products $33 million a year. The biggest winners, based on present trade levels, would be dairy ($21.8 million), timber (paper, wood products $2.5 million), fish ($2.1 million) and methanol ($2.1 million).

The assessment does not include benefits to the wool industry, which depend in part on the outcome of ongoing market access negotiations.

Nor does it include the effect of tariff reductions that encourage trade in new products.

Mr Sutton said he expected China to be in a position to join the WTO by the end of the year.

The Singapore closer economic partnership would remove tariffs on textiles, clothing and footwear and free up New Zealand and Singapore's access to each other's services and investment markets.

The agreement is being finalised by officials and goes to cabinet next month, before being tabled in Parliament and sent to the foreign affairs and defence select committee.

Cabinet has final say on international treaties and agreements on New Zealand's behalf, something which has not pleased the Alliance, the Greens and Act, who have been pressing for Parliament to have a say on such issues.

The Alliance last week secured a parliamentary vote on the agreement and will almost certainly vote against the deal as its first formal point of difference in its coalition agreement with Labour.

The Greens have already labelled the vote "a Clayton's vote" as its outcome will be non-binding on cabinet.

The agreement is in danger only if National decides to object. a briefing on Treaty of Waitangi clauses.