14 April 2004 Media Statement

New Zealand and China to work towards FTA

Prime Minister Helen Clark and Trade Negotiations Minister Jim Sutton announced today that New Zealand and China have agreed on a formal Trade and Economic Cooperation Framework.

Negotiations for the Framework were announced when Chinese President Hu Jintao visited New Zealand last October.

Helen Clark and Jim Sutton said that a key element of the Framework is agreement that New Zealand and China will begin a Free Trade Agreement (FTA) negotiation next year.

“This is the first time China has agreed to negotiate an FTA with a developed country,” Helen Clark and Jim Sutton said.

“An FTA with China would benefit businesses already exporting there and would create opportunities for other New Zealand companies. This would apply across the primary, secondary and service sectors.

“The government believes that an FTA with China would unlock significant trade and investment potential for both countries. China is the world’s fastest growing major economy and New Zealand’s fourth largest trading partner. New Zealand exports to China have more than doubled in the past six years.

“New Zealand was the first country to support China’s accession to the WTO, which brought China fully into the world trading system.

“The Chinese Government is showing a firm commitment to developing its relationship with New Zealand. Under the agreement to work towards an FTA, New Zealand will recognise that China has established a market economy system. That is a precondition for negotiating an FTA with China.

“China has already developed a strong and vibrant private sector. Since China decided to move away from central planning a decade ago, its economy has grown by around 10 per cent each year.

“New Zealand has also agreed that it would not apply provisions in China’s WTO Accession Protocol relating to anti-dumping.

“The key point is that New Zealand manufacturers will lose none of the trade remedy protections which they presently have under New Zealand legislation. In effect we are agreeing not to use protections for domestic producers which were sought by other countries and which we have not used in any case.”

The negotiation will be preceded by a joint study on the costs and benefits of an FTA, due for completion by the end of this year.

The agreement to begin negotiations on an FTA will be formalised when the Trade and Economic Cooperation Framework (TECF) is signed in June.

Jim Sutton said the Framework will incorporate measures to promote co-operation across a range of economic sectors, as well as to strengthen ministerial, business and academic dialogue.

“The Framework lays the foundations for future economic and trade cooperation between the two states. It was finalised in negotiations in Beijing last week.

“Once the Framework is signed, we will start work on a detailed feasibility study, which will include an extensive programme of public consultation. New Zealand’s negotiating position will not be developed until the study and consultation process is completed,” Jim Sutton said.

ENDS

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