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Primary sector exports under threat from Australia-China FTA

Media release
18 September 2013

Primary sector exports under threat from Australia-China FTA

New Zealand’s first mover advantage from its China free trade agreement (FTA) is at risk of being diluted as Australia’s newly-elected Government looks to conclude its own FTA with China, according to global accounting body CPA Australia.

CPA Australia country manager for New Zealand, David Jenkins, says after eight years of inconclusive negotiations the new Australian Government will likely seek to finalise a free trade agreement with China within 12 months.

“While recent food safety scares have been a big wake-up call for New Zealand exporters, now is definitely not the time to be complacent or fall back on the fact we were first with a China FTA. 

“There are many barriers that Australia and China still need to overcome before a free trade agreement can be concluded, particularly in the financial services space, but these barriers are not insurmountable.”

Mr Jenkins says Australia’s priority areas for a China FTA will be in areas where New Zealand’s traditional advantages lie: dairy, sheep meat, beef, wine and horticulture.

“An Australia-China FTA would mean more competition for Kiwi exporters, particularly in the primary sector.  Currently, it is reported that New Zealand exporters of products such as lamb, beef and wine enjoy a 10 to 15 per cent price advantage over our Australian competitors, and this price advantage is attributed primarily to the New Zealand-China FTA.”

Mr Jenkins says New Zealand businesses cannot assume that this price advantage will continue – and they should be using the period leading up to the commencement of a probable Australia-China FTA to build on their competitive advantages, including deepening existing relationships, building new relationships and new product development.

“The assumption that New Zealand exporters must work under is that an FTA between Australia and China will be signed soon, and they must prepare for greater competition.  Those that act now to improve competitiveness and productivity are more likely to succeed in the emerging environment. Those that are complacent are more likely to fail, regardless of their size.”

ENDS

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