Trade developments: PM heads for USA to push high-tech exports while O’Connor announces starting date for revised China FTA

New Zealand does not have a Free Trade Agreement (FTA) with the United States, visitors to the Official Website of the US International Trade Administration are advised.

They are further advised of New Zealand’s aims to have FTA arrangements to cover 90 per cent of NZ goods exports by 2030.

But while the PM announced yesterday she will undertake a trade-focused visit to the United States in May, the pursuit of a free trade agreement with the US wasn’t mentioned in her press statement.  She talked, rather, of New Zealand’s high-technology export sectors.

This was followed by COVID-19 Response Minister Chris Hipkins announcing new traveller requirements which he described as another milestone towards the reopening of our international border.

And then came news from Trade and Export Growth Minister Damien O’Connor that  the Upgrade to New Zealand’s Free Trade Agreement with China will take effect on 7 April.

The only other announcement on the Beehive website, since Point of Order reported yesterday on what Jacinda Ardern and her ministers are doing, came from Environment Minister David Parker.

This related to yet another dip into the Jobs for Nature fund – $12 million will be spent on seven projects around the country, cleaning up waterways and creating up to 243 jobs over the next five years.

The PM’s visit to the USA – along with the latest travel requirements – are part of the so-called “reconnection strategy”.

Ardern said she will

“… undertake trade engagement on the United States West Coast focused on New Zealand’s high-technology export sectors. “

“New Zealand is in demand internationally. A priority for our international engagement is to focus on trade opportunities that accelerate our recovery raise New Zealand’s profile in key export markets,” Jacinda Ardern said.

During the visit the Prime Minister will be the principal speaker at Harvard University’s Commencement in May.

As for progress on an NZ-US free trade agreement, Point of Order notes that newly arrived American Ambassador Tom Udall early in December was reported to be

“… making encouraging noises that a free trade agreement (FTA) with the US could finally happen.”

Udall said an FTA wouldn’t necessarily happen “immediately”, but it’s

“… something I want to engage in and something I’d really like to work with”.

Trade Minister Damien O’Connor at that time said free trade with the US is a long-standing goal, and the government has been encouraging the US to engage in our region.

New Zealand is keen for an FTA with the US because that country – the biggest economy in the world – is our third biggest export market.

The US does not have the same urge to strike a deal with us, perhaps because in 2020 New Zealand was the 47th largest goods trading partner with $US7.4 billion in total (two-way) goods trade during 2020.

In his statement today, Damien O’Connor said New Zealand and China have ratified the Upgrade Protocol and agreed the Entry into Force date, the final step following the signing of the FTA Upgrade in January last year.

“This Upgrade is a significant step for us and forms part of a body of work we’re doing to drive our economic recovery from COVID,” Damien O’Connor said.

“Our trade agenda has very good momentum, with our primary industry exports forecast to hit a record $50 billion this year alone.”

Furthermore, he said NZ will soon be concluding our FTA negotiations with the UK, which will remove tariffs on our exports and create new market opportunities for New Zealand businesses.

And free trade negotiations are progressing with the EU for access to a market of 450 million people.

The China FTA Upgrade starting date was agreed in a virtual meeting last week between O’Connor and his Chinese counterpart, Minister of Commerce Wang Wentao.

Goods and services exports between China and New Zealand reached $20.1 billion in the year ending June 2021.

The upgrade, which modernises the original 2008 New Zealand-China FTA, includes new market access commitments in goods and services, and additional trade facilitation measures.

O’Connorr said:

“In terms of goods, the Upgrade will deliver further market access improvements, resulting in tariff-free access for 99 percent of New Zealand’s $4 billion wood and paper trade to China, once fully implemented.  Our existing FTA will also be augmented by new chapters in e-commerce, competition policy, government procurement and the environment. 

“Separately, from 1 January 2022, most New Zealand dairy products to China are entitled to duty-free access for the first time as a result of ongoing implementation of the existing FTA. This will directly benefit many of New Zealand’s rural exporters to China, and is expected to result in additional savings of $180 million per annum at current export volumes,” Damien O’Connor said.

More information about the Upgrade Protocol can be found on the MFAT website. 

The traveller requirements released today – described by Chris Hipkins as another milestone towards the reopening of our international border – aren’t too obviously aimed at helping exporters.  

Hipkins emphasised –

  • Three layers of protection to minimise risk – PDT, vaccination and self-isolation
  • Rules to come into force in time for Step 1 of the border reopening
  • Self-isolation rules similar to those for domestic COVID-19 close contacts
  • Groups can apply to leave self-isolation to train or practice

But the focus seemed to be on trans-Tasman family rather than world-wide commercial travel.

“From 28 February, travellers to New Zealand – starting with Kiwis and other current eligible travellers from Australia – will be able to enter without staying in MIQ as long as they are fully vaccinated, return a negative test before flying and spend seven days in self-isolation, taking two rapid antigen tests.

“These actions will lower the risk of COVID-19 entering the community while allowing more families to reunite, and will assist with the economic recovery and immediately address worker shortages.”

Latest from the Beehive

China FTA Upgrade enters into force in April

New Zealand’s economic recovery from COVID-19 continues to build momentum, with the Upgrade to New Zealand’s Free Trade Agreement (FTA) with China entering into force on 7 April 2022…

Self-isolation rules for travellers to New Zealand released

Traveller requirements released today mark another milestone towards the reopening of our international border.

Prime Minister’s trade engagement with the United States

The Prime Minister will undertake a trade focused visit to the United States in May.

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