Best deal ever

The Herald reports:

New Zealand’s exports to China have more than trebled since the free trade pact between the two countries came into force.

New Zealand exports to China were worth $7.9 billion in the year to August (the most recent trade statistics available). That’s up from $2.2 billion five years earlier, an increase of 260 per cent. China is now our largest export market.

The China FTA is our best deal ever and Phil Goff’s greatest legacy.

People should remember though that both Greens and NZ First voted against it. They voted against a deal that has seen an extra $5.7 billion a year of exports. Imagine the state of the NZ economy if their views had prevailed.

“It has exceeded all expectations, I think,” says Charles Finny.

Now with consultancy Saunders Unsworth, Finny was the Ministry of Foreign Affairs and Trade official who in 2004 was tasked with building the case with the Chinese for beginning negotiations, the first with a developed country, and then launched the negotiations in 2005.

They were to take three years.

And five years after the agreement took effect, the transition to free trade still has some way to go. Tariffs on beef, sheepmeat and kiwifruit will not go until the start of 2016, and not until the start of 2019 on whole and skim milk powder and wool. But by then 96 per cent of New Zealand’s exports to China will be duty-free.

This is key information. The full benefits of the FTA are yet to be realised.

New Zealand now has a network of free trade agreements which covers all of Asean and all three Chinas – Taiwan and Hong Kong as well as the People’s Republic – and that provides options to diversify, he says.

“If you look at markets like Taiwan, Singapore and Hong King where you have a proxy for a Chinese population at certain income levels, you see a disproportionately large spend on food and on things like high quality fruit. Look at Hong Kong and wine; it is just absolute upside.”

Rabobank, in a report last week, is bullish about the prospects for lifting beef exports to China as rising incomes drive demand for what is considered one of the foods of affluence.

Yet some parties remain hostile to international trade.

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