China and New Zealand signed a historic trade agreement

Китай и Новая Зеландия подписали историческое соглашение о торговле

In the midst of major trade negotiations between the US and China, which are continuing, it is worth noting some of the much smaller trade negotiations between New Zealand and China.
The basic story is that New Zealand and China signed a trade agreement in 2008 and just completed a “modernization” of the transaction. There are some differences in the nature of negotiations between the U.S. and China, and in negotiations between New Zealand and China, but, nevertheless, there may be some lessons to be learned from the situation in New Zealand and China.

The first thing worth mentioning is that both sides consider the original transaction is successful. Here’s how it described New Zealand:

“The new Zealand-China free trade agreement (FTA) became a success story. Since the entry into force of the free trade Agreement in 2008, the volume of bilateral trade (exports and imports of goods and services) increased more than threefold, from 9 to more than 32 billion US dollars, and the free trade Agreement became the catalyst for trade and economic cooperation between our countries”.

Economists are skeptical that much can be learned on the basis of bilateral trade balance, but nevertheless, take a look at the evolution of the balance of trade New Zealand and China after signing the agreement, after which the New Zealand deficit turned into a surplus.

So they sell each other New Zealand and China?

In March 2019, the main export product to China was milk powder, butter and cheese. The exports reached $ 4.5 billion, accounting for a quarter of New Zealand’s exports to China.

Logs and wood took the second place on volume of export in the amount of $ 3.1 billion.

Tourism also made a significant contribution to the total surplus in New Zealand’s with China in the amount of $ 3 billion. Tourist expenditures and foreign students made the most of it.

In March 2019, imports from China were estimated at 13.1 billion dollars. The main imports were electrical machinery and equipment (e.g. mobile phones), mechanical machinery and equipment (e.g., laptop computers), as well as textiles and textile products (e.g. clothing).

Update of SST is not revolutionary, but simply adds a bit of liberalization and updates several provisions.

Trade rules and business practices have changed significantly over the last decade. It is against this background New Zealand and China agreed in November 2016 to start negotiations on updating CST to the agreement continued to reflect current realities in their dynamic trade relations. Nine rounds of negotiations have been held for three years in New Zealand, and Beijing. New Zealand and China announced the conclusion of negotiations on the updating of SST, 4 Nov 2019, on the sidelines of the East Asia summit.

The upgrades will make the FTA New Zealand-China’s most modern and high quality.

Here are a few examples of the additions:

New Zealand secured the abolition of fees during the 10-year implementation period of 12 wood products and paper.

Further operational improvements cover the procedures for processing “perishable goods” (introduction of the accelerated six-hour time customs clearance and release of such goods after hours and proper storage), as well as expanding the volume of preliminary orders in the existing free trade agreement.

Added new chapters on policy issues in the field of competition, electronic Commerce, public procurement, environment and trade.

Improvements include new market access in several services sectors, including:

Environmental pluginlib operation aeroportodilisbona of aviaperevochika ground obslugovuvannya services.The free trade agreement between New Zealand and China were much simpler than those that are currently in the United States. New Zealand mainly insisted on basic liberalization rather than on mass changes in the structure of the Chinese economy, which, as they say, asks the administration to trump (although we are currently discussing a “first phase” of the transaction is rather limited). This made the negotiations much easier. New Zealand has had a few products and services that it wanted to sell more to the Chinese, and she was able to achieve this.

Despite these differences, the fact that industrialized countries were able to conclude a trade deal with China and was satisfied with the result, and then – without the fees! – was able to open the text and engage in further negotiations. Some of the key lessons here are that it is important to be realistic about what can be achieved and be prepared to give something in return.

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