New Zealand has told Hong Kong that it cannot accept a trade agreement with unenforceable rules of origin, Trade Negotiations Minister Jim Sutton said today.

Mr Sutton met Hong Kong Trade Secretary Brian Chau on Friday night (New Zealand time) while in transit in Hong Kong returning from a trade mission in China.

Mr Sutton briefed Cabinet colleagues on the discussion this morning.

"I put it to the Hong Kong minister that New Zealand could not agree to rules of origin that were not enforceable. This means that final stage of manufacture would have to be carried out in Hong Kong and exported directly to New Zealand. Alternatively, final stage processes could be carried out in New Zealand.

"Mr Chau clearly understands New Zealand's position and will be consulting with his industry that wish to have some minor finishing processes carried out in a third country."

Mr Sutton said the Hong Kong government would now have to consider its position.

There is no set timeframe for that.

He emphasised that it had always been the Government's policy that it would only sign trade agreements that benefited New Zealand citizens. If there was no benefit, there was no point in having an agreement.

"New Zealand industry ? particularly the textiles, clothing, and footwear industry ? have been closely involved in formulating the New Zealand position in these negotiations. Foreign Affairs and Trade Ministry staff have worked hard to ensure there has been proper consultation with interested people and organizations."

Mr Sutton said that he believed that agreement on other aspects of the proposed Closer Economic Partnership agreement were achievable, provided that the rules of origin issue could be resolved.

ENDS

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