Friday, April 11, 2008

China Signs Free Trade Deal with New Zealand; First with Developed Country

China Signs Free Trade Deal with New Zealand; First with Developed Country
(The Canadian Press)

China and New Zealand signed a sweeping free trade agreement Monday, China's first such pact with a developed country. The deal, signed by Commerce Minister Chen Deming and his New Zealand counterpart Phil Goff at Beijing's Great Hall of the People, will give New Zealand access to one of the world's fastest-growing economies.

"This is an historic day for China-New Zealand relations," said Premier Wen Jiabao in remarks ahead of the signing. "The agreement not only means we met goals we set two years ago for our negotiations, but it also makes New Zealand the first developed country to reach a free trade agreement with China."

When the deal goes into effect October 1, New Zealand exports to China that now face tariffs of five per cent or less will be cut to zero. There will be a staggered time frame for cuts on New Zealand exports that face larger tariffs, with 31% of New Zealand's exports to China tariff free by 2013.

New Zealand Prime Minister Helen Clark, present at the signing, was one of the first Western leaders to visit Beijing since anti-government rioting broke out last month in Tibet. "They see it as we do, a very important step in relations between our countries," Clark told reporters. "But they're also cognizant of the wide international importance of the FTA."

New Zealand has a population of 4.1 million people, miniscule compared to China's 1.3 billion.

The deal came after 15 rounds of negotiations over three years, Clark said, adding that she expects other countries will follow New Zealand. "Obviously Australia is in negotiations with China and would like to be where we are today. I think there is interest from the European Union and I think there will be broader interest at the WTO," she said.

Two-way trade between China and New Zealand currently is worth more than US$6.1 billion (3.9 billion euros) a year, with Chinese exports making up about 75%, according to Statistics New Zealand.

Tariffs on dairy products, a primary New Zealand export, will be phased out over a longer time frame, taking until 2019 when almost all of the country's current exports to China will be tariff free. "The FTA provides for elimination over time of tariffs on 96% of New Zealand's current exports to China," a New Zealand government statement said.

Beyond trade in goods, the agreement covers the services sector, from insurance and banking to education and labour supply.

The agreement also calls for up to 1,800 Chinese to enter New Zealand each year to work in areas such as traditional Chinese medicine, language teaching and food service.

New Zealand said it hopes the agreement will lead to a long-term trade partnership. "The upfront commitments on goods, services and investment and the mechanisms which provide for further development of the agreement over time should help keep New Zealand at the fore front of the evolution of trade and investment relationships with China," the government statement said.

The pact still has to be formally ratified by New Zealand's Parliament.

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