China, New Zealand Leaders Tout Potential of Updated Trade Deal

17 May 2018

Top officials from China and New Zealand called this week for ramping up negotiating efforts to clinch an updated trade deal, highlighting the value this could have for warding off protectionist pressures, supporting economic growth, and shoring up the rules-based trading system. 

New Zealand’s Prime Minister Jacinda Ardern, Trade Minister David Parker, and Chinese Ambassador to Zealand Wu Xi were among the high-level politicians at the China Business Forum held on 14 May in Auckland, New Zealand. During this fourth iteration of the event, leaders acknowledged uncertainty in the global trade system but reasserted the importance of the bond between the two countries, who have a long history of diplomatic ties and have had a trade deal in place for the past decade.

The China-New Zealand Free Trade Agreement was a recurring theme during the forum, with Parker telling the forum that the next round of negotiations to upgrade the deal will begin in the next few weeks. Through this renewal process, the countries hope to reach their goal of A$30 billion (US$20.6 billion) in two-way trade by 2020.

A milestone trade agreement

Beijing and Wellington began negotiations for the original deal in 2004 following a Joint Study Report, which indicated the mutually beneficial impacts of a FTA between the countries. Following 15 rounds of negotiations over three years, the two countries signed the agreement in Beijing in 2007 and it entered into force in 2008 the completion of the ratification process in both countries.

“Let me just recognise that the FTA has been an unprecedented success for both countries, and enormously beneficial for New Zealand,” Ardern said at the Forum.

The China-New Zealand FTA was also notable at the time for being China’s first free trade accord with a developed country. China is New Zealand’s second-largest trading partner, with two-way trade valued at over A$15 billion (US$10.3 billion) in 2016, according to a New Zealand government factsheet.

The 2008 agreement is a comprehensive document, which progressively eliminates tariffs on a range of goods, including various key agricultural products. It includes a chapter outlining intellectual property (IP) matters, as well as chapters on services trade, investment, trade remedies, customs procedures, and dispute settlement, among others.

The upgrade process

The process to update the accord began in 2015 with the creation of a joint evaluation mechanism, including the establishment of a working group to provide recommendations. Leaders formally announced the official launch of the upgrading negotiations in 2016.

There are nine areas targeted for the updated trade deal: technical barriers to trade; customs procedures, cooperation, and trade facilitation; rules of origin; services; competition policy; e-commerce; agricultural cooperation; environment; and government procurement. (See Bridges Weekly, 24 November 2016)

The two countries agreed to upgrade the agreement in a series of negotiations starting in 2017. The first round was held in Beijing in April 2017, with negotiators discussing progress on the accord’s implementation, recent developments in reform and trade policy, and key issues for both sides according to both the Chinese press release and the New Zealand government website.

The second round of negotiations took place in July 2017, again in the Chinese capital. Building on work from the previous round, negotiators made headway on trade facilitation, technical barriers to trade, and competition policy. The third round continued in November 2017 in New Zealand, with China citing “positive progress” having been made in all nine fields.

Upcoming rounds

In their respective addresses to the Forum, the leaders outlined how the countries hope to upgrade the FTA through the upcoming negotiations to ensure a modern agreement fit for current needs and the wider international landscape. In addition to trade in goods, New Zealand officials emphasised how the people of the two countries had come together through tourism and academic exchanges.

Officials were optimistic about the possibility to engage in exchanges in emerging technologies and modern enterprise. “We must keep looking forward too and are now exploring new fields of cooperation in agritech, science and technology, TV and movies, and even wine making. I expect to see this trend continue into the future,” Ardern said.

Technology, as well as the Chinese political environment, have evolved in recent years, Parker said, paving the way for new issues to be addressed in the reworked trade accord. “China has broadened its free trade policy to embrace new issues like e-commerce and competition regulation, and has increased its focus on areas such as the environment,” the New Zealand trade minister said.

China also looked toward increased collaboration through the revision of the FTA. The country highlighted the ways that they had opened up their economy and established new development goals, built around trade reforms.

“There’s a lot we can do together, such as advancing cooperation on the Belt and Road Initiative, reaching more consensus on upgrading bilateral FTA to expand the bonds of trade, striving to realise the A$30 billion goal for two-way trade by 2020,” the Chinese ambassador said.

Wider economic context

In increasing ties with China, the New Zealand officials drew attention to the importance of using deeper economic ties as a bulwark against protectionist pressures. Parker laid out four ways that New Zealand can act to address the current geopolitical context, including with the support of other partners.

The defence strategy includes the pillars of protecting the rules-based system, accelerating regional trade agreements such as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP), building coalitions like the Commonwealth, and advancing “open plurilateralism.”

China and New Zealand are both RCEP members; China is not, however, a CPTPP member nor a Commonwealth country.

“New Zealand will continue to look to pursue better market access for our exporters through the WTO and vigorous negotiation of FTAs, including the upgrade of our FTA with China while maintaining a sustainable and inclusive national economic framework at home,” Parker said.

The Chinese Ambassador mirrored New Zealand’s concerns about protectionism, noting that the improved FTA would illustrate the two side’s commitments to open, rules-based trade.

“We should guard against any kind of unilateralism and protectionism, and join hands to safeguard international system underpinned by the purposes and principles of the UN Charter, and multilateral trade system which promotes rule based global economic order, to ensure common development and common prosperity,” Wu said.

Officials say they hope to make progress in negotiations towards the finalisation of the FTA over the next few months. Talks to advance RCEP, which also includes both countries, are due to continue over the coming months as well, in a bid to wrap up that process this year.

ICTSD reporting; “New Zealand China Business Summit kicks off, focusing on development, opportunities,” XINHUA, 14 May 2018. 

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