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China FTA makes 99% of NZ paper and wood tariff-free

Trade Ministers for New Zealand and China have signed an upgrade to the free trade agreement between the two countries. New Zealand will have 98% free trade with China, its largest trading partner, once the existing free trade agreement comes fully into force. The upgrade has primarily focused on reducing compliance costs for New Zealand exporters, and other measures which ease access to China’s markets. Sources: Timberbiz, Stuff NZ

Exporters will have key staff they can contact at Chinese ports to iron out any issues.

Under the upgraded agreement, 99% of New Zealand’s NZ$3 billion trade in paper and wood products will gain tariff-free, preferential access to China.

An additional 12 wood and paper products will have duties removed; the expected value of this change was NZ$36 million.

Wood products have been a major export to China. Of the NZ$6.4b in wood exports in 2018, 48% headed to China.

“This modernises our free trade agreement and ensures it will remain fit for purpose for another decade,” New Zealand Minister for Trade and Export Growth Damien O’Connor said.

“This upgraded agreement comes at a time of considerable global economic disruption due to COVID-19. The upgraded free trade agreement is part of the Government’s Trade Recovery Strategy, in response to the economic shock of COVID-19.”

Minister O’Connor signed the upgraded agreement at the Beehive in Wellington through a ‘virtual signing ceremony’ with China’s Minister of Commerce, Wang Wentao, who was participating from Beijing.

Mr Wentao, speaking through an interpreter, said the signing of the upgrade was “another milestone” in co-operation between the countries.

“I’ll be more than happy to maintain working relations with you; jointly break new ground in trade and economic relations between China and New Zealand,” he said.

Minister O’Connor said that China was one of New Zealand’s most important relationships. Signing this agreement today builds on the significant benefits both countries have enjoyed as a result of our existing FTA.

Key outcomes of the upgrade include new rules that will make exporting to China easier and reduce compliance costs for New Zealand exports, a better deal for our services exporters through expanded market access and most-favoured nation commitments, and the introduction of environmental considerations – the most ambitious trade and environment chapter and the highest level of commitment that China has agreed in any FTA.

The upgrade will also mean that 99% of New Zealand’s nearly NZ$3 billion wood and paper trade to China will have tariff-free access to China.

These outcomes will bring tangible benefits to a range of New Zealand businesses, including exporters of perishable goods such as seafood, the forestry sector, and other primary sector industries. Services sectors that will benefit from new or enhanced market access commitments include advertising, education and aviation-related services.

“New Zealand’s existing free trade agreement with China has been very successful, but China’s free trade agreements and our business practices have evolved since it was signed over a decade ago,” Minister O’Connor said.

“This is why we entered into upgrade negotiations: to ensure our agreement is modern and deepens our relationship further, and that New Zealand’s exporters have the best possible access to the China market.”

In dairy, existing conditions have been maintained, with all safeguard tariffs to be eliminated within one year for most products, and three years for milk powder.

“This means that by 1 January 2024, all New Zealand dairy exports to China will be tariff free.

“Protections in the existing agreement that are important to New Zealanders, such as our rules on overseas investment and the Treaty of Waitangi exception, remain in place,” Minister O’Connor said.

Parliament will now consider the agreement for ratification as part of New Zealand’s treaty examination process before it enters into force.

China is New Zealand’s largest trading partner, with two-way goods and services trade now exceeding NZ$32 billion a year.