New Zealand signed a comprehensive trade agreement with China on Monday, the first developed nation to seal such a deal with the world’s largest developing economy.
Helen Clark, New Zealand’s prime minister, and Wen Jiabao, the Chinese premier, attended a signing ceremony in Beijing to mark the agreement, completed after three years and more than 15 rounds of negotiations.
Phil Goff, New Zealand’s trade minister, has claimed China’s maiden trade agreement with a developed nation as a coup for his country and a potential framework for others.
“Just about every country in the world wants a trade agreement with China. New Zealand was important because we set the basis for the future negotiations and we have tried to come up with a high quality and comprehensive deal,” he said.
Beijing may have used New Zealand as a test case because it has a relatively straightforward trading relationship with the country, but that may also limit it as a model for other deals. “We didn’t have to deal with wheat, rice or motor vehicles,” Mr Goff said.
Kevin Rudd, Australia’s prime minister, is due in Beijing later in the week to promote his country’s trade links with China. Although he is expected to emphasise Australia’s interest in securing a deal with China after 10 rounds of talks, the negotiations have lost momentum over the past year.
China has been unwilling to make concrete offers on sectors Australia is most focused on – agriculture and services – partly for fear that any such concessions would flow on to larger countries such as the US and in Europe.
Under the agreement, New Zealand will gradually remove all tariffs on imports from China by 2016, while in return, China will phase out tariffs on 96 per cent of its imports from New Zealand by 2019. The first tariff cuts will kick in on October 1.
Tariffs on New Zealand goods range from 10 per cent to 20 per cent, and are almost 15 per cent on agricultural goods such as dairy products and wool, two of its biggest exports.
Mr Goff estimated the trade agreement would be worth close to NZ$400m (£160m, $319m) to the country each year.
New Zealand was the first developed country to sign China’s accession to the World Trade Organisation and the first to recognise China as a market economy, a concession the US and the EU have refused to make.
China is New Zealand’s third-largest trading partner and its fastest growing export market. New Zealand’s exports to China are worth NZ$2bn. China trails Australia, the US and Japan as New Zealand’s biggest export markets.
Copyright The Financial Times Limited 2008