China, New Zealand agree to expand free trade agreement

China is now New Zealand's largest trading partner, with annual two-way trade of more than NZ$30 billion (S$29 billion).
China is now New Zealand's largest trading partner, with annual two-way trade of more than NZ$30 billion (S$29 billion).PHOTO: AFP

BEIJING/WELLINGTON (REUTERS) - China and New Zealand signed a deal on Tuesday (Jan 26) that upgrades their existing free trade pact, giving exports from the Pacific nation greater access to the world’s second-largest economy.

The pact comes as Beijing seeks to establish itself as a strong advocate of multi-lateralism following a bruising trade war with the United States and as the coronavirus keeps international borders closed.

New Zealand Prime Minister Jacinda Ardern confirmed the signing of an expanded trade deal with China, noting its significance amid the pandemic.

"China remains one of our most important trade partners... For this to take place during the global economic crisis bought about by Covid-19 makes it particularly important," Ms Ardern said at a news conference.

The pact widens an existing trade deal with China and ensures it remains fit for purpose for another decade, New Zealand Trade Minister Damien O’Connor said in a statement.

It provides for tariffs to be either removed or cut on many of New Zealand’s mostly commodities-based exports, ranging from dairy to timber and seafood, while compliance costs will also be reduced.

"The upgrade shows the two sides’ firm determination to support multilateralism and free trade," Mr Zhao Lijian, a spokesman of China’s foreign ministry, told a news briefing in Beijing on Tuesday. 

The previous day, speaking at a virtual meeting of the World Economic Forum, President Xi Jinping had criticised isolationism and "Cold War" thinking and called for barriers to trade, investment and technological exchange to be removed. 

In recent months, Beijing signed an investment pact with the European Union and joined the world’s largest free trade bloc in the 15-country Regional Comprehensive Economic Partnership (RCEP), which also includes New Zealand.

China has also expressed interest in joining the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) Agreement, the successor to an earlier pact from which Washington withdrew.

China’s new deal with Wellington also opens up sectors such as aviation, education and finance.

In exchange, New Zealand will increase visa quotas for Chinese language teachers and tour guides, the official Xinhua news agency said. 

New Zealand was the first developed country to sign a free trade agreement with China in 2008, and has long been touted by Beijing as an exemplar of Western engagement.

China is now New Zealand’s largest trading partner, with annual two-way trade of over NZ$32 billion (S$31 billion).

But ties have been tested under Ms Ardern’s government as New Zealand criticised China's influence on small Pacific islands and raised human rights concerns about Muslim Uighurs in China's Xinjiang region.

Ms Ardern also backed Taiwan’s participation at the World Health Organisation despite a warning from Beijing.

The trade pact also comes as Beijing’s ties with neighbouring Australia worsened after Canberra called for an independent investigation into the origins of the coronavirus pandemic, which was first reported in central China.

Australia has appealed to the World Trade Organisation 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.