Upgraded trade deal on table

John Key and Chinese president Xi Jinping.

Prime Minister John Key is to visit China this month to discuss upgrading the free trade agreement between the two countries that was signed almost eight years ago.

But he is warning against expecting a swift resolution.

"We are going to work hard on it. I can't guarantee immediate progress," he said of the upgrade that should automatically follow the signing of an FTA between China and Australia, which is understood to have included more favourable terms than New Zealand's deal.

Under the NZ-China FTA's "most favoured nation" clause, any improved access for another signatory is by rights extended to the other signatories.

Asked whether China acknowledged New Zealand's MFN claim, Key said: "I think so."

He had met the Chinese ambassador to New Zealand yesterday and Trade Minister Todd McClay was travelling to China in advance of Key's meetings, which would include audiences with the president, Xi Jinping and premier Li Keqiang.

Other major issues on the agenda included China's desire for an extradition treaty with New Zealand to allow it repatriate Chinese citizens thought to have migrated to New Zealand with illegally obtained wealth. Aid, defence cooperation, international students, and tourism would also be on the agenda, and China's territorial ambitions in the South China Sea.

Chinese official frustration with the length and uncertainty of Overseas Investment Office recommendations and political decisions on the purchase of New Zealand assets by foreign investors is also expected to be a major focus.

Key will meet President Xi and Premier Li in Beijing but will also visit Xi'an and Shanghai. He said the FTA had been a success for both parties - "two-way trade between New Zealand and China has more than doubled, reaching almost $19 billion. An FTA upgrade would allow us to modernise the agreement and ensure it continues to drive our relationship forward".

The Wood Council has in the past called for officials to tackle the obstacles the forestry industry faced as part of the upgrade.

Chairman Brian Stanley told Radio New Zealand in March that non-tariff barriers imposed by China meant that his industry took the view that there was no FTA in place.

- BusinessDesk