Prospect of NZ-China FTA Good News

Prospect of NZ-China FTA Good News

A free trade deal between China and New Zealand has the potential to bring many benefits to both countries, but in particular to New Zealand agriculture, said Tom Lambie, President of Federated Farmers of New Zealand (Inc).

"We each stand to gain from the substantial boost such a partnership would give to bilateral trade," said Mr Lambie. His comments follow the announcement that New Zealand and China would begin negotiating a free trade agreement (FTA) next year -- the first time China has agreed to negotiate an FTA with a developed country.

New Zealand exports to China have traditionally been dominated by wool, but have diversified in recent years to include dairy products, especially milk powders, casein, butter, and whey, and agricultural products such as live goats and cattle.

Total exports to China have fallen four percent to NZ$1.43 billion in the year to February from the previous corresponding year, but are still more than double the $649 million of exports in 1999. China last year displaced Britain as New Zealand's fourth-largest export destination.

"A free trade deal could give New Zealand exporters, particularly those of agricultural products, a potentially huge market," said Mr Lambie. “There is a long way to go before a free trade deal is concluded, but any progress toward wider access for exports to a market of 1.3 billion people has to be good," he said.

China's share of world income has risen from four per cent in 1988 to 13 percent today. By 2015, China is expected to account for 20 percent of world income, according to the Australian Bureau of Agricultural and Resource Economics (ABARE).

Mr Lambie praised both Prime Minister Helen Clark and Trade Negotiations Minister Jim Sutton and other negotiators for their work so far. "It's fantastic that New Zealand is first off the rank. This will help soothe worries that we are being left behind on negotiating access to the world's larger economies after the recent completion of a limited Australia-United States FTA."

"While we would prefer trade access to be negotiated through the rules-based World Trade Organisation, a bilateral free trade deal is a welcome consolation prize."

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