Another step to building a modern economy – but an upgraded FTA with China would be welcome, too

Trade and  Export  Growth Minister  David  Parker  returned   to  NZ   on  Saturday  after  what his  PR  flaks   described  as  a  “successful”  official  visit to  China.

So  Point of Order  went  looking  for  the  success.  And yes, he has had  talks with his  ministerial  counterparts  in the trade and  environment  portfolios.

This, according to the press release issued in his name, constituted  “ yet another step  in this government’s  work to  deliver a  modern, sustainable economy  for   New Zealanders”.  

Wow. And no doubt our wellbeing will be lifted, too.

But what  about  the  upgrade to  the  free trade agreement  between    NZ  and  China?   This  was  first  mooted four years ago,  after  Australia  secured  in 2015 a  FTA on better terms than NZ’s 2008 ground-breaking model.

Given  that  two-way trade  between  China and NZ  is  running  at  $30bn  a  year, anything that  could  improve   the trade flows  would be welcome  by  both  exporters and importers,  not to mention consumers.

NZ  is now  one of  China’s  top five sources of imported food.

It was  in 2016 that NZ and China agreed on the scope  of the  upgrade and formal negotiations were launched at the APEC Leaders Meetings in Lima, Peru.

And then  followed:

 April 2017: Round one of upgrade negotiations in Beijing, China

 July 2017: Round two of upgrade negotiations in Beijing, China

 November 2017: Round three of upgrade negotiations in Queenstown, NZ.

 June 2018: Round four held in Beijing, China

 Sept 2018: Round five held in Beijing, China

 Nov 2018: Round six held in Beijing, China

It should be unsurprising,   then,   that  Parker – in his   talks  in  Beijing  – should put some focus in his official meetings with Chinese Minister of Commerce Zhong Shan, on the  successful completion of the  marathon FTA upgrade negotiations.

Indeed  he  pressed  for  it  to  be  done   “as soon as possible”.

He got from Commerce Minister Zhong Shan    an  agreement   “to take the next step with the FTA upgrade”.

This, he said, followed on from the agreement between Premier Li Keqiang and Prime Minister Jacinda Ardern during her visit to China earlier  in  April.

Exporters will be looking to the  next  “step” as the final  one.  A    round   of  talks  is due to  be  held in Wellington during  May.

Once negotiations have concluded, the text of the agreement will be considered by Cabinet.  Cabinet will also consider whether to approve the text as well as the necessary steps to bring the new agreement into force.

The existing 2008 Agreement will continue to remain in force, and the upgraded free trade agreement will sit alongside these original commitments.

The upgraded free trade agreement will add new provisions to the existing agreement, and in areas where the existing agreement’s provisions have been amended, these will be replaced by the upgraded free trade agreement.

NZ Herald’s  Fran  O’Sullivan   who has specialised   in  commentary on China-NZ  relations,   reckons  it   has been  Parker’s  “most substantive visit to  China  as a minister  in the  Ardern  government. He plans to  scope new   areas  of co-operation on science and  innovation”.

O’Sullivan   went on to  record Parker   as  saying  a successful  upgrade of the FTA will also  be  a  demonstration   of both countries’  commitment  to trade and a  rules-based  system  and  “our  rejection of protectionism”.

 Meanwhile  Point of Order  understands  the  dairy  industry  may have to keep  in  check  its  hopes of   getting  terms  as  favourable as those enjoyed   by  Australia ( or even better).   Tariffs of over $100m a year look set to continue until 2024.

The tariffs are applied once NZ exports reach a certain “safeguard” level, with the trigger point for milk powder, the biggest export, at the beginning of the season.  Although the safeguards end in 2024, NZ exporters will be at a disadvantage compared  with Australian competitors until then.

Apparently  the  NZ  bargaining  position  has  been  to  seek  gains    in e-commerce,  and  services   (particularly digital)   in exchange  for  not  pressing  hard  the  dairy “safeguard”  issue.

Maybe that will  be  a  “step”  on the  way  to a  “modern, sustainable  economy”  for  NZers.  In the meantime it’s not too much of a stretch  to  assess   the  protracted  negotiations   on the   FTA  upgrade  as a  commentary   on  how  authorities  in  Beijing   view  the relationship  with NZ.

One thought on “Another step to building a modern economy – but an upgraded FTA with China would be welcome, too

  1. We are being played by the Communist Chinese as I’m sure you are aware. The 2008 FTA was a very bad deal for New Zealand displaying incompetence and wishful thinking on New Zealand’s part. New Zealand needs to diversify away from its unhealthy reliance on this oppressive totalitarian state which threatens the security of our region as soon as possible.

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