Trade Minister hints news of China FTA upgrade coming 'soon'

Prime Minister Jacinda Ardern and Chinese Premier Li Keqiang attend a signing ceremony at the Great Hall of the People in Beijing in April. Photo / AP

A long-awaited "upgrade" to New Zealand's free trade agreement (FTA) could be imminent, with negotiations reaching a point where both governments are willing to sign.

Since 2016, officials have been in talks to renegotiate parts of the agreement signed between New Zealand and China in 2008, Beijing's first with a developed country.

Exporters from New Zealand hoped officials could win new concessions, with China having agreed larger quotas and tariff elimination in other more recent FTAs, in particular Australia's agreement on dairy products in its 2014 agreement.

For much of 2018 the odds of a deal looked remote, with trade sources warning that Beijing was unlikely to give ground on dairy products and signs of strained relations between the two governments. New Zealand also appeared to have less that it could offer China than it wanted in return.

Now it appears that talks have progressed to a point where both governments are prepared to sign, although there is no clarity on when a deal might be announced.

"We hope to be able to make an announcement soon," Trade Minister David Parker said on Friday, without giving details.

The gains from the upgrade are believed to be small in comparison to the original 2008 deal, including no improvement for the dairy sector.

However, the upgrade is expected to benefit exporters of wood and paper products, while the elimination of some export certification would reduce compliance costs, a particular gain for companies which do a relatively small amount of trade with China.

Newsroom reported on Friday that an official announcement was expected within weeks, possibly as soon as this weekend at the East Asia Summit.

Gains expected from the upgrade are expected to benefit exporters of wood and paper products, with New Zealand exporters offered tariff elimination on a range of wood products and tariff parity with other countries on others.

It appears China may also be willing to do away with certificates of origin for imports from New Zealand.

Currently exporters to China wanting to achieve the tariff concessions available under the 2008 deal are required to fill out a certificate of origin, which then has to be certified by an authorised body, such as a chamber of commerce.

Under other agreements, such as the CPTPP, exporters can simply self-certify where the products originated and now it appears Beijing is prepared to do the same for New Zealand.

If confirmed, this would remove a compliance cost which would benefit exporters who do smaller volumes of trade with China.

Dairy exports have complained that while the tariff concessions won in the 2008 deal were impressive at the time, a surge in trade means the quota is typically filled in the first month of the year, while Australia won a larger quota in its 2014 deal with China.

New Zealand's current quota restrictions to China for dairy exports are due to be lifted in 2022 and 2024.

While China is understood to have offered some earlier lifting in the restrictions, whatever limits were then negotiated would have been permanent.