UPDATED: New Zealand has secured an upgrade in its free trade agreement with China, Prime Minister Jacinda Ardern and Premier Li Keqiang have just announced at a meeting in Bangkok.

"This ensures our upgraded free trade agreement will remain the best that China has with any country," Ardern said.

The original trade deal was signed in 2008 and negotiations for the upgrade were launched in November 2016 under the previous National government.

The pair were meeting on the sidelines of the East Asia Summit.


"She was speaking at the East Asia Summit in Thailand following her bilateral meeting with China's Premier, Li Keqiang.
"It reflects the importance both countries place on our relationship and builds on the significant mutual benefits both countries have enjoyed as a result of our excellent existing FTA," Jacinda Ardern said.

According to the Government, the key outcomes of the upgrade include:

• New rules that will make exporting to China easier and reduce compliance costs for New Zealand exports by millions of dollars each year, such as faster border release of fresh food products, and other products that may have to go through other countries en route to China.

• The most ambitious environment chapter and the highest level of commitment that China has agreed in any FTA. It includes commitments to promote environment protection and ensure that environmental standards are not used for trade protectionist purposes.

• Giving 99 per cent of New Zealand's $3 billion wood and paper trade to China preferential access, with tariff elimination over a 10-year period on 12 additional wood and paper products worth NZ$36 million in trade to China.

The only change identified for China by New Zealand was in greater flexibility for visa allocations under the "iconic Chinese occupations".

The overall allocation of 800 will be unchanged but Chinese tour guides will increase from 100 to 200 places and be broadened to include Chinese tourism specialists; and Mandarin teaching aides will be increased from 150 to 300 places by a redistribution from under-used categories.
Trade Minister David Parker is in Shanghai for talks on improving the World Trade Organisation but he said in a statement that while New Zealand was the first developed country to sign a free trade agreement with China in 2008, its other free trade agreements had evolved since then.

"This is why we entered into upgrade negotiations: to ensure our agreement is modern and deepens our relationship further, and to ensure that New Zealand's exporters have a deal as good as, if not better than, their competitors."


In dairy, existing conditions had been maintained, with all safeguard tariffs to be eliminated within just over two years for most products, and four years for milk powder.

Ardern: "This means that by January 2024, New Zealand will have the best access to China for dairy products of any country."

"Protections in the existing agreement that are important to New Zealanders such as New Zealand's rules on overseas investment and the Treaty of Waitangi exception remain secure."

In his opening remarks to Ardern, Li said negotiations had been smooth and a breakthrough had been made.

"This attests to the stronger political trust and the broad prospect of practical co-operation between our two countries."

His comments appear to be a reference to something President Xi Jinping said to Ardern in her visit to Beijing in April, comments which suggested trust had diminished in the preceding testing period.

"Now the bilateral relationship faces new opportunities of development, our two sides must trust each other, pursue mutual benefit and strive to open up new grounds in our bilateral relations," Xi said.

Li also said New Zealand had a competitive edge in many areas with China and China stood ready to have fair trade with New Zealand.

Responding to Li, Ardern said she agreed that the upgrade sent an important message at this time.

"I really absolutely agree with you – concluding now sends a message not just to us but to the world of the importance of free trade.

"We are strong supporters, strong proponents of free trade and will continue to do so particularly in this environment that we are in so I agree with you. It is a very important message [that] we are very happy to share."

National's trade spokesman and the former minister who initiated the FTA upgrade, Todd McClay, was unenthusiastic in his reaction.

"It's clear the deal was always going to be done, however trade experts will be concerned the Government has settled with China because of difficulties in the relationship experienced by the New Zealand business community earlier this year," he said.

"New Zealand officials have worked very hard and are to be commended. However, they have been let down by a distracted Government that has failed to prioritise trade."

A $36 million of gains on wood was insignificant when compared with the $32 billion worth of total trade with China.

McClay said he would give the Government a three out of 10 on trade and the Government needed to prove itself.

"RCEP will not deliver any significant gains for New Zealand's agriculture, particularly dairy, if it's even done.

"The fledgling US FTA is going nowhere fast because Jacinda Ardern has ruled out going to the White House to meet with President Trump anytime soon."

In fact Ardern has not ruled out going to the White House. She has not had an invitation – and has not been actively seeking one.

Next steps included legal verification of the draft text, with the signing and release of the text expected in early 2020.

China is New Zealand's largest trading partner, with two-way trade recently exceeding $32 billion.