A controversial free trade pact signed with China today allows for a limited number of Chinese workers to enter New Zealand to fill skill shortages and will see nearly all Kiwi products duty-free in the massive Asian market within 12 years.
• More on FTA with China
CTU cautiously welcomes trade deal
Spotlight on China trade deal
| 
|
| Reuters TRADE PARTNERS: Prime Minister Helen Clark and China's Premier Wen Jiabao who witnessed the historic trade deal. |
Trade Minister Phil Goff and Chinese counterpart Chen Deming inked free trade agreement (FTA) - China's first with a developed nation - in a ceremony at Beijing's Great Hall of the People.
The deal caps the number of workers at 1800 at any one time with no more than 100 workers in any sector in an effort to safeguard Kiwi jobs.
Goff said New Zealand negotiators had come under pressure from China to provide for the movement of workers across borders. He described the move to allow some workers in on temporary visas as a modest gesture that would benefit the country and have no impact on the employment of Kiwis.
Almost all tariffs on Kiwi exports to China, a country of more than 1.3 billion consumers, will be eliminated by 2019, three years after imports from the massive Asian economy become duty free.
Prime Minister Helen Clark, who witnessed the signing with her Chinese counterpart, Premier Wen Jiabao, hailed the agreement as a major achievement that would lift New Zealand
s export earnings from China by between $225-350m million each year.
She said being the first nation to do a preferential trade deal gave Kiwi businesses a significant advantage in a market that was becoming increasingly competitive.
For New Zealand exports to China:
* the FTA provides for elimination over time of tariffs on 96% of current exports, equal to an annual duty saving of $115m based on current trade;
* on entry into force in October, 35% of exports to China will be duty free;
* duties on a further 31% will be phased out over five years;
* remaining Chinese tariffs will be phased out by 1 January 2019;
* by the end of tariff phase-out, duties on all but $80m of current exports worth nearly $2bn will have been eliminated.
For Chinese exports to New Zealand:
* the FTA provides for the elimination of tariffs on all exports, up from 37% now;
* over 70% will be duty free within 5 years;
* longer phase-out programmes apply to sensitive textile, apparel, footwear and carpet sectors;
* all tariffs eliminated by 2016.
The agriculture and dairy industries are the major beneficiaries of the deal, but due to sensitivities on the Chinese side their tariff phase-out times are the longest.
Tariffs on skim milk and whole milk powders, which make up the bulk of the industry's exports to China, will not be eliminated until 2019. For sheep meat the phase out will be complete in 2016.
Tariffs on apples will take 5 years to go and kiwifruit 9 years, with end dates set in 2012 and 2016.
The FTA creates a tariff quota for wool, which will be duty-free up to 25,000 tonnes next year with an annual growth rate of 5% over 8 years to 2017.
Seafood tariffs will be phased out over 5 years, ending 2012.
The outcome in the services area, such as tourism, education, construction and transport were more modest.
But negotiators managed to persuade China to grant New Zealand most favoured nation status, a first for any trade agreement that country has done. That means Kiwi service suppliers will automatically receive the benefits of any commitments China makes in future agreements with other countries.
The FTA provides temporary entry rights for a maximum of 1,800 Chinese workers at any one time to address skills shortages.
It stipulates they must have a firm job offer and specific qualifications. The three-year visas will be limited to 20 approved occupations, capped at 100 workers in any sector.
The approved sectors include traditional Chinese medicine practitioners, Chinese chefs, Mandarin teachers, martial arts coaches and tour guides. It also includes engineering fields, veterinarians, university lecturers, plumbers, radiographers, mechanics and boat builders among others.
China free trade timeline
A timeline of New Zealand's relations with China and the moves towards a trade deal.
1949 – The Communist Party under the leadership of Mao Zedong founds the People's Republic of China.
1972 – New Zealand under Norman Kirk becomes the first developed nation to recognise China.
1979 – Premier Deng Xiaoping begins the process of opening up China to economic reform and moves away from a centrally controlled economy to a market based system, by 2005 China's economy quadruples in size.
1989 – The massacre of pro-democracy demonstrators in Tiananmen Square results in New Zealand suspending ministerial and senior official visits for a year.
2002 – Hu Jintao becomes China's premier and the pace of high level visits between the two countries picks up.
October 2003 – Premier Hu and Prime Minister Helen Clark agree to negotiate a trade and economic framework.
May 2004 – A framework is agreed, New Zealand recognises China as a market economy and agrees to look at the idea of trade talks.
November 2004 – Miss Clark and Premier Hu agree that trade talks should begin.
December 2004 – First round of negotiations begin.
December 2007 – The 15th round of negotiations take place.
March 2007 – Both countries leaders finalise agreement.
April 7 2007 – Deal is signed.
