Wood and dairy export paths to China eased in FTA developments

Trade and Export Growth Minister Damien O'Connor. Photo / Mark Mitchell

An upgrade to New Zealand's Free Trade Agreement with China comes into force in April, with new rules making exporting to China easier and reducing compliance costs by millions of dollars a year, says Trade and Export Growth Minister Damien O'Connor.

Highlights of the upgrade include tariff-free access for 99 per cent of New Zealand's $4 billion wood and paper trade to China, once fully implemented.

From January 1 most New Zealand dairy products to China were entitled to duty-free access for the first time as a result of ongoing implementation of the 2008 FTA, O'Connor said.

New Zealand and China had last week ratified an upgrade protocol and the activation date, after the signing of the FTA upgrade last month. The update modernises the original 2008 FTA. New Zealand was the first developed country in the world to sign an FTA with China, now its biggest export market.

The upgrade was part of work helping to drive New Zealand's economic recovery from Covid, said O'Connor, noting FTA negotiations with the UK would also soon be concluded, removing tariffs on New Zealand exports and creating new market opportunities.

Free trade negotiations were also progressing with the EU for access to a market of 450 million people. Last month the Regional Comprehensive Economic Partnership (RCEP) had come into force.

"Our trade agenda has very good momentum, with our primary industry exports forecast to hit a record $50 billion this year alone."

O'Connor said goods and services exports between China and New Zealand reached $20.1 billion in the year ended June 2021.

The upgrade includes new market access commitments in goods and services, and additional trade facilitation measures, he said. It eliminated tariffs on 12 additional wood and paper products worth around $30m in trade to China.

The upgrade ushered in the introduction of environmental considerations - the most ambitious environment chapter and the highest level of commitment that China has agreed in any FTA, O'Connor said. It included commitments to promote environment protection and ensure that environmental standards are not used for trade protectionist purposes.

It also provided new and expanded services market access commitments that would benefit New Zealand's services exporters in sectors such as education, ground-handling and specialty air services, plus forward-looking commitments in key sectors including education and services related to agriculture, he said.

Also in the upgrade would be modernised rules and improved co-operation on behind the border technical barriers to trade, and new provisions on competition policy, e-commerce and government procurement.

The existing FTA would also be augmented by new chapters in e-commerce, competition policy, government procurement and the environment.