China, New Zealand Confirm Plans to Update Trade Deal


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Officials from New Zealand and China have announced their plans to “upgrade” their existing trade deal, which has been in force since 2008.

The news was confirmed in a joint ministerial statement issued by New Zealand Trade Minister Todd McClay and Chinese Minister of Commerce Gao Hucheng on 20 November, following a bilateral meeting on the sidelines of the Asia-Pacific Economic Cooperation (APEC) Summit in Lima, Peru.

“New Zealand was the first developed country to negotiate and conclude an FTA with China, and I’m pleased that today we have reached the fifth ‘first’ in our relationship, as the first developed country to launch and upgrade of the FTA,” said New Zealand Prime Minister John Key in a press statement following the ministerial meeting.

The first round of negotiations is set to begin in the first half of 2017. Key said that the “upgrade” aims to incorporate advances made in other free trade deals which China has reached in the years since the original accord with New Zealand entered into force.

For example, China has reached deals in recent years with AustraliaCosta RicaIcelandPeruSouth Korea, and Switzerland.

The current FTA provides for the progressive elimination of tariffs on 96 percent of New Zealand exports by 2019, while New Zealand committed to phasing out tariffs on all imports from China by 2016. It also has provisions aimed at improving services market access over time, together with efforts at boosting customs cooperation and facilitating business travel, among others.

According to New Zealand government figures, bilateral goods trade doubled between the two trading partners during the 2009-2014 period, reaching NZ$20 billion (US$14.1 billion).

New Zealand’s major goods exports to China include dairy and wood products; the country’s major services exports to China include tourism and education. Meanwhile, China’s top goods exports to New Zealand include electronics, clothing, furniture, and toys.

Working group recommendations

In the build-up to this weekend’s announcement, a joint working group had spent the past several months reviewing what areas should fall under the upgrade’s scope.

These include topics such as e-commerce and competition policy; technical barriers to trade, customs cooperation, and trade facilitation; rules of origin; services; agricultural cooperation; environment; and government procurement.

The working group report also notes that the two Pacific trading partners may choose to add other areas to this list later on.

Upgrading the deal, the working group said, will help “respond to the evolving regional and global economic architecture, and ensure the FTA remains more relevant in the current circumstances of trade, investment, and business between China and New Zealand.”

Some industry groups have welcomed the move to update the accord, particularly in light of technological and other developments in recent years, such as in the area of e-commerce.

“It is important that the regulations around e-commerce facilitate the expansion of this trade,” said Catherine Beard, executive director of ExportNZ, in comments to Chinese news agency Xinhua.

Regional trade context

Both China and New Zealand are participants in the ongoing 16-country Regional Comprehensive Economic Partnership (RCEP) negotiations, which are due to continue into 2017. (See Bridges Weekly, 10 November 2016). These trade and investment talks also include all ten members of the Association of Southeast Asian Nations (ASEAN), along with Australia, India, Japan, and South Korea.

The joint ministerial statement by McClay and Gao reaffirmed the two sides’ “commitment to work towards the swift conclusion of the RCEP negotiations,” as outlined in a separate statement issued by all RCEP ministers last month.

ICTSD reporting; “China, New Zealand launch talks to upgrade free trade pact,” REUTERS, 21 November 2016; “Beefed-up China trade deal hoped to benefit dairy farmers,” NEWSHUB, 22 November 2016; “New Zealand govt, exporters hail potential of China FTA upgrade,” XINHUA, 21 November 2016.

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