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CHINA yesterday signed its first free trade agreement (FTA) with a developed nation - a move keenly watched by countries such as Singapore and Australia which are undergoing similar discussions with the world's fastest-growing nation.
Chinese Premier Wen Jiabao met New Zealand Prime Minister Helen Clark in Beijing yesterday to sign the pact, which will give the South Pacific nation's exporters duty-free access to China's huge consumer market from Oct 1.
It is New Zealand's most significant FTA since it signed its Closer Economic Relations pact with Australia in 1983.
China has previously inked FTAs with developing countries like Pakistan and Thailand.
Analysts believe the focus of the agreement leans more towards farm produce as almost half of New Zealand's exports are from agriculture, rather than sectors like manufacturing, services and investments, which are more crucial to other developed economies such as Singapore.
China is New Zealand's third-largest trading partner, with trade between the two nations totalling US$5.9 billion (S$8.14 billion) last year.
Under the FTA, concluded after three years and 15 rounds of talks, China will gradually phase out tariffs on New Zealand's dairy goods over the next 12 years, while those on meat and kiwi fruit - as high as 20 per cent currently - will be removed over nine years.
Duties on seafood and apples from New Zealand will also be eliminated after five years.
In return, the island nation pledged to cut all tariffs on Chinese goods by 2016.
Chinese goods like clothing and shoes are among the few exceptions in New Zealand that are now being taxed, even though 95.5 per cent of its imports are already tariff-free.
Details of the FTA on other sectors such as services and investments remain unclear, though they reportedly extend beyond terms struck within the World Trade Organisation framework, including laying down scope for freer movement of professionals.
The pact is expected to set a basic framework for China's future FTAs, with Australian Prime Minister Kevin Rudd expected to touch on the topic during his visit to Beijing this week.
It has also been reported that Singapore could conclude an FTA with China this year, the talks for which began in October 2006.
Singapore is 'pleased to note the conclusion of the China-New Zealand FTA', said a spokesman for the Ministry of Trade and Industry yesterday.
'The negotiations for the Singapore-China FTA are in progress and we look forward to an early conclusion,' she told The Straits Times, without giving details.
In any case, said Mr Derek Loh, an international trade lawyer, Singapore would want China to match the benefits granted to New Zealand, or offer Singapore even better treatment.
Ms Wong Chian Voen, a corporate FTA adviser with business and litigation firm Bryan Cave, added that Singapore's FTA will focus more on the services and investment sectors.
A Singapore-China free trade agreement is expected to spur an ongoing process by South-east Asian nations to create a regional, trillion-dollar free trade area with China.
vincec@sph.com.sg
Tariffs targeted
THE pact will gradually phase out tariffs on New Zealand's dairy goods over the next 12 years, while those on meat and kiwi fruit - as high as 20 per cent currently - will be removed over nine years.
Duties on seafood and apples from New Zealand will also be eliminated after five years.
In return, the island nation pledged to cut all tariffs on Chinese goods by 2016. Chinese goods such as clothing and shoes are among the few exceptions in New Zealand that are now being taxed.
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