FTA upgrade to create momentum for China-New Zealand cooperation

The upgraded free trade agreement between China and New Zealand will generate fresh momentum for further cooperation and boost modern trade in services and regional connectivity activities between the two sides, experts said on Tuesday.

The two sides inked an upgrade to their 12-year-old bilateral FTA late last month, on the basis of the Regional Comprehensive Economic Partnership agreement that they signed along with 13 other countries in November.

Under the new deal, they have committed to reinforcing cooperation in areas including e-commerce, competition rules, government procurement, the environment and goods trade. The content on environment and trade is of higher level than that in the RCEP, with the two sides achieving higher-level cooperation in stepping up environment protection, enhancing enforcement and implementing multilateral environmental protocols.

Experts said the move is an indication that both nations hope to achieve a comprehensive, modern and high-quality agreement. Trade and economic ties between the two sides will expand in terms of scale and become more dynamic in the next stage, they said.

"The upgrade of the China-New Zealand FTA will improve logistics efficiency and cut other operational costs, which in turn creates more value for businesses," said Leo Liu, general manager for China of Grin Natural Inc, an Auckland-based oral care brand. The company, which entered the Chinese market via e-commerce platforms in 2018, said it sold over 300,000 toothpaste tubes from late 2019 to the end of last year.

"Although being relatively new to the Chinese market, the upgraded FTA has created excitement and confidence to expand into new categories such as mouthwash and dental floss products to reach more consumers," he said.

Teh-han Chow, CEO for China unit of Fonterra Co-operative Group Ltd, a New Zealand multinational dairy company, said the group anticipates closer cooperation between the two countries following the upgraded FTA in a number of areas for several decades.

"In an era where we are seeing pockets of protectionism pop up around the world, it is refreshing to see China and New Zealand continue to take leading steps for free trade," he said, noting the upgrade covers a range of new trade issues, including areas such as e-commerce, and provisions aimed at facilitating trade in goods, which will continue to support the cooperative's exports into the Chinese market.

China has become Fonterra's largest, most important and fastest-growing market in the world, with sales volume accounting for a quarter of its global total. It plans to build a new application center in Wuhan, Hubei province, to better serve customers in China's central and western regions soon.

The FTA will make exporting to China easier for New Zealand exporters by saving more operational costs. The new rules will mean, for instance, faster border clearance of fresh foods, as well as other goods that may have transited through other countries or regions en route to China, said Cui Fan, an international trade and economics professor at the University of International Business and Economics in Beijing.

Due to the COVID-19 pandemic and other factors, Sino-New Zealand trade declined by 0.4 percent on a yearly basis to 125.53 billion yuan ($19.43 billion) in 2020, data from the General Administration of Customs show.

Timber, dairy and leather products, meat, pulp and raw materials for textiles are China's main imports from New Zealand, while clothing, machinery, telecom equipment and parts, computers, furniture, toys and sporting goods are the pillar exports to New Zealand.

China and New Zealand signed an FTA in April 2008 and implemented the same in October that year. They launched upgrade talks in November 2016 and concluded the talks in November 2019, according to information released by the Ministry of Commerce.

KiwiRail, New Zealand's State-operated railway company, ordered 10 new diesel locomotives from CRRC Dalian Co Ltd, a subsidiary of China Railway Rolling Stock Corp, last month, on top of the 63 that have already been purchased since 2009, the Chinese company said.