Summary of the Joint China-New Zealand FTA Feasibility Study

The study concludes that both China and New Zealand will benefit from an FTA.

Both economies will expand, as will bilateral trade, if immediate and comprehensive and reciprocal elimination of trade barriers is achieved between China and New Zealand.

For China there will be some expansion in exports to New Zealand but most gains will be achieved by enhanced domestic economic efficiency through increased competition and allocative efficiency within its economy.

For New Zealand there will be limited domestic efficiency gains - most of the benefits will be achieved through an expansion in exports. New Zealand exports of goods and services to China between 2007 and 2027 are expected to grow between NZ$260 and $400 million a year (US$180-280 million).

Chinese exports of goods and services to New Zealand between 2007 and 2027 are expected to grow between NZ$60 and $100 million a year (US$40-70 million).

The study notes the complementarities that exist between the Chinese and New Zealand economies and does not identify any major problems standing in the way of a free trade agreement.

The study concludes that an FTA will deliver positive benefits across both economies, but notes that some sectors in both China and New Zealand might face some adjustment challenges and recommends that these be taken into account in negotiations.

It recommends that negotiations start as soon as possible and cover goods, services and investment. The text of the study makes it clear that negotiations must cover all goods.

This recommendation has been agreed by both Governments. When they met in Santiago on November 19 2004, Prime Minister Helen Clark and Chinese President Hu Jintao announced that negotiations would begin as quickly as possible.

A wide range of non-tariff measures is identified as affecting trade on top of tariff barriers, which can be quite high in some product areas. Likewise a range of services and investment barriers is also identified.

The importance of sustainable development – including labour and environment issues for both Governments – is highlighted in the study. Specific outcomes are envisaged.

On top of the barriers identified, the study also covers capacity building, Customs facilitation, e-commerce, intellectual property, sanitary and phytosanitary measures, SME cooperation, technical regulations and standards, temporary entry/mobility of business people, trade and investment promotion, competition policy and government procurement.

NOTE: the full study will be available on the Ministry of Foreign Affairs and Trade website http://www.mfat.govt.nz from Saturday 20 November.

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