China free trade agreement bold

Launching the framework within which to negotiate a free trade agreement with China is a bold move reminiscent of the Lange/Douglas reforms of the late 1980's, the Employers & Manufacturers Association (Northern) says.

"China's economic rise and rise is a fact our manufacturing exporters have to come to terms with," said Alasdair Thompson, EMA's chief executive.

"The purchasing power of China's expanding middle classes is rising fast as is their appetite for western goods. Getting our fine food and beverages and other high value, unique products onto the ground floor there represents the opportunity of a lifetime.

"Hence a free trade agreement with China holds great promise though for many exporters and their employees it presents a huge challenge.

"Free trade does not necessarily mean open and free access to China's markets and it will mean a steep learning curve for a large part of New Zealand business.

"EMA will be doing everything we can to ensure the final agreement is in all New Zealand's best interests.

"The transition for some of our manufacturers and their workforce could be substantial with plant closures and staff layoffs possible.

"In fact the impact on them is likely to be the biggest since the tariff cuts of the late 1980's and early 90's. High volume, extremely low priced manufacturing, rapidly rising quality standards, customised production runs, and company tax rates that dwarf ours, are just some of the challenges.

"We cannot hope to match the 3.5 per cent effective company tax rate typical of a Hong Kong-based incorporation that manufactures products across the border in Shenzhen, or match China's labour rates.

"Government has given us assurances that our manufacturers will be consulted on the terms of any FTA before any agreement is ultimately signed off."