Chinese Premier Li Keqiang Visits Australia and New Zealand, Eyes Trade Deal Upgrades

30 March 2017

In official visits to Australia and New Zealand over the past week, Chinese Premier Li Keqiang met with government and business leaders to discuss economic ties and cooperation, while outlining plans with his counterparts to begin upgrading their existing free trade agreements (FTAs) this year.

While in Canberra, Li and Australian Prime Minister Malcolm Turnbull agreed to a declaration of intent to review the services and investment aspects of the China-Australia Free Trade Agreement (ChAFTA), though that deal only came into force just over a year ago.

In the subsequent visit to New Zealand, the countries agreed on a timeline for initiating talks to revamp the FTA between China and New Zealand, signed in 2008, with renewed negotiations set to begin starting next month. (See Bridges Weekly, 27 February 2008)

China is the largest trading partner to both Australia and New Zealand, and both countries are celebrating 45 years of diplomatic ties with China this year.

Regional, international trade cooperation

The leaders each reaffirmed their commitment to free trade at a time of continued uncertainty over the future approach to trade policy by some major players.

Australia, New Zealand, and China are already in talks for the Regional Comprehensive Economic Partnership (RCEP), a pact linking the 10 members of the Association of Southeast Asian Nations (ASEAN) with their six FTA partners, which the leaders said could act as a channel for deepening trade ties in the region.

A news item released by the Australian government following the officials’ meetings referred to a mutual commitment to “advancing global and regional trade and investment liberalisation through the WTO, APEC, and Regional Comprehensive Economic Partnership.”

The former two acronyms refer to the World Trade Organization and the Asia-Pacific Economic Cooperation Forum, respectively.

"First, I have come for free trade," Li said at a luncheon hosted by Turnbull last week. "We are ready to enhance relevant cooperation with Australia and demonstrate to the region and the world our determination to uphold trade liberalisation and economic globalisation."

ChAFTA update

On the agenda for Li and Turnbull were aspects related to creating closer ties between the nations, initiating a review for greater liberalisation of services and investment elements of the ChAFTA, while simultaneously urging onward the continued implementation of the accord. The leaders also agreed to start a review of the Memorandum of Understanding on investment facilitation concluded alongside the deal to ensure greater investor protection.

The Australia-China FTA, which entered into force in December 2015, has cut tariffs in a number of areas. In the year since, the Australian wine and skin care industries were particularly cited as having benefitted from the agreement, with sales up 38 percent and 82 percent respectively, according to a statement by Australian Trade Minister Steven Ciobo. (See Bridges Weekly, 20 November 2014)

The ChAFTA aims to increase the flows of investment and trade in services by introducing greater market access and enhanced regulatory certainty for business actors. The Declaration of Intent to review the agreement, signed on Friday, will seek to further minimise “barriers to trade in services, agree on additional protections for investors and open up new commercial opportunities,” according to the press release.

The leaders also signed an agreement aimed at facilitating access to the Chinese market for Australian beef producers.

In this vein, China and Australia also made plans to expand cooperation on agriculture, innovation, research, intellectual property, energy, and security, establishing a bilateral ministerial dialogue on energy as well as other dialogues on selected issue areas.

China, New Zealand to start talks in April

Li’s visit to New Zealand also had upgrading an existing FTA at its core. Plans to fine-tune the New Zealand-China agreement were first announced last November in Peru alongside the APEC leaders’ summit, discussions for which are now pegged to begin on 25 April following a bilateral meeting between Li and Prime Minister Bill English in Wellington this week. (See Bridges Weekly, 24 November 2016)

The upgrade would seek to ensure that New Zealand and China trade on the same terms as more recently negotiated agreements, including the ChAFTA, and accounts for economic developments on the global and regional stage. New Zealand was the first developed country to sign a bilateral FTA with China.

"The upgrade will allow us to modernise the FTA to take account of changes in our economic relationship since the FTA came into force," said English in comments to the New Zealand Herald.

In an op-ed authored for the same media outlet, Li similarly touted the value of building on their existing ties to address new opportunities.

“Now that we have a fairly stable trade relationship on farm products, we need to move beyond import and export and promote high-tech-driven, high-value-added, whole-industrial-chain co-operation,” said the Chinese premier.

Li also flagged areas ranging from environmental protection to the advance of e-commerce as having significant potential for future work between Wellington and Beijing.

ICTSD reporting; “Exclusive: To New Zealand, with love,” NZ HERALD, 27 March 2017; “China-NZ free trade upgrade talks to start soon after meeting of PM Bill English and Premier Li Keqiang,” NEW HERALD, 27 March 2017; “Australia Shouldn’t Pick Between U.S. and China, Premier Li Says,” BLOOMBERG, 23 March 2017; “China’s Premier to Visit Australia Next Week to Push Trade,” BLOOMBERG, 17 March 2017; “Premier Li reassures NZ on China-US relationship,” NZ HERALD, 28 March 2017; “China’s Premier Li Tours Australia, New Zealand,” THE DIPLOMAT, 28 March 2017.

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