The Post - 08 May 2024
Aspects of NZ-China FTA up for renegotiation
By Thomas Manch
Cabinet may soon sign-off the renegotiation of part of the free trade agreement with China.
New Zealand officials have been talking with Chinese counterparts in recent months about further liberalising services trade between the two countries. Trade Minister Todd McClay, who visited Beijing in April, has confirmed he expects to announce that formal trade negotiations will begin in the coming month or so.
“When the upgrade was done, they probably hadn’t done many agreements in services and so they were pretty cautious. Now they’re at the stage where, when I was up there a couple of weeks ago, they were leaning into it quite well,” McClay told The Post.
Such a renegotiation of the long-standing free trade agreement was planned when the two countries signed an “upgrade” in 2022, and Prime Minister Chris Hipkins and Chinese leader Xi Jinping agreed to start the process when they met in June 2023.
Briefings obtained under the Official Information Act show the National-coalition Government was briefed in November by the Ministry of Foreign Affairs and Trade about the status of negotiations over service trade and the need for a Cabinet mandate to proceed.
Services export to China has been growing, and the market is now the fourth “most important” for such trade, according to the ministry.
The upgraded FTA obtained better market access (or the reduction of trade barriers such as tariffs) to China for New Zealand exporters of services such as environmental, audio-visual, private education, real estate, and airport operation.
But this was done on the basis of agreeing each sector that would be included into the agreement. New Zealand instead wants all services trade to be liberalised, except that agreed on by a “negative list”.
“We want to turn it around, so you can do anything in services, except if it’s on a list that says you can’t. Currently it’s restrictive,” McClay said.
“By turning it around, unless they’ve said there isn’t liberalisation because they have a defensive interest, then you can trade in services in anything at all.”
The willingness to pursue further trade opportunities with China comes as the Government also seeks to diversify New Zealand’s trade, due to the risk posed by so much of New Zealand’s exports to the Chinese market.
“It’s a very long-standing relationship,” McClay said.
“Trade on both sides is underpinned by that it was [the] first trade deal that they did, and so it’s very important. So the desire to keep improving access for New Zealanders to the Chinese market is important to the Government, as it is with anywhere where we think we can do better.”
Alongside this, the Government has also continued to pursue interest in deeper security relationships with traditional partners Australia and the United State, including possibly through the Aukus defence pact - which China condemns as “Cold War mentality”.
Last week, Foreign Minister Winston Peters gave a speech to the NZ-China Council which canvassed the Government’s three-pronged strategy with the China relationship: engage where interests converge, act to preserve, protect, and promote New Zealand’s interests, and align and work with partners to advocate for interests and value.
In the speech, Peters listed concerns with China including its support of Russian industry as the Ukraine war continues, and aggressive actions in the South China Sea.
In response, the Chinese Embassy in Wellington issued a statement saying China was “firmly committed to continuously developing” the New Zealand relationship. However, China was also “committed to managing our differences through constructive dialogues instead of ‘megaphone diplomacy’”.
The Chinese embassy was contacted for comment.
