In a development that sees China leveraging its trade leverage against a former five eye country, Beijing has signed a free trade agreement with New Zealand allowing the island nation export opportunities to the China’s market where state-backed have an advantage over their competitors.
New Zealand Prime Minister Jacinda Ardern confirmed the signing of the agreement at a news conference on Tuesday. Incidentally, the pact was the subject of discussions for years and was even concluded in November 2019, but was held back by China all these years.
New Zealand trade minister Damien O’Connor signed the upgraded agreement in Wellington through a “virtual signing ceremony” with Chinese commerce minister Wang Wentao, who was in Beijing.
In a statement New Zealand said, the agreement “modernises” the existing free trade agreement with China and ensures it remains fit for purpose for another decade. The pact supposedly makes exporting good to China easier and is expected to reduce compliance costs for New Zealand exports by millions of dollars each year.
“The upgrade will also mean that 99% of New Zealand’s nearly NZ$3 billion ($2.16 billion) wood and paper trade to China will be granted tariff-free access,” said O’Connor.
The deal will benefit New Zealand exporters of perishable goods including seafood, the forestry sector, and other primary sector industries. Existing conditions for dairy products 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,” said O’Connor.
The development comes in the wake of a diplomatic row between China and Australia over the origin of the coronavirus disease which started from Wuhan, China. Beijing has barred UN officials from visiting Wuhan, despite verbal assurances of doing all it can to help the global body find the source of the pandemic which has dragged the world economy to a new low.
New Zealand’s ties with China has been tested following increased criticism of Chinese influence on small Pacific islands and over gross human rights violations, including genocide, of Uighurs Muslim in Xinjiang, China.
Ardern has also backed Taiwan’s participation at the World Health Organization (WHO) despite a warning from Beijing.
Australia has appealed to the World Trade Organization to review China’s decision to impose hefty tariffs on imports of Australian barley.
New Zealand, which will host the regional Asia Pacific Economic Cooperation summit this year, has said it would be willing to help negotiate a truce between China and Australia.