NZ, China to begin talks on upgrading free trade agreement in April, PM English announces as Chinese Premier Li Keqiang visits Wellington

New Zealand and China will begin upgrade talks on their free trade agreement (FTA) on 25 April, Prime Minister Bill English says.

The announcement comes as Chinese Premier Li Keqiang visits New Zealand, after a summit at Wellington’s Premier House.

Speaking to media in Wellington on Monday, English said New Zealand’s focus would be on raising some of the ‘safeguard’ levels set in the original agreement in 2008.

The dairy industry in particular had raised the issue, English said. The upgrade was needed due to the growth in trade being so strong under the FTA that the original safeguards were now set too low. See the original/current dairy safeguards here.

“It’s going to be a challenging negotiation to get what New Zealand wants, but that’s nothing new,” English said. “We’re used to always negotiating trade agreements around sensitive issues, particularly around agriculture products.”

Premier Li had earlier spoken of New Zealand’s strong dairy exports to China – even using the figures to later suggest claims of Chinese steel dumping should be no different to the Chinese complaining about the sale of NZ dairy products in China – something that was not happening, he said. See Li's full translated comments in the video below.

English said the comment from Li was not surprising and showed the robustness of the relationship between the two nations. On steel dumping, English said that had not been discussed at the summit, with the investigation happening here at an arm’s length from the government.

Road and Belt initiative

Meanwhile, English sought to play down the potential impact of New Zealand’s support for China’s Road and Belt initiative. Over the weekend, several media outlets reported on the potential for Chinese firms to ship in labourers to work on major NZ infrastructure projects which could end up being financed under the initiative.

New Zealand plays a small role in the Road and Belt initiative through its support for the Asian Infrastructure Investment Bank, English said. The bank is set to finance economic development projects initiated by China.

“We’re supportive of the general notion and we hope it does create some opportunities for New Zealand,” English said. The direction of the scheme would more likely see New Zealand companies helping out on infrastructure projects overseas, rather than inbound work, he said.

The Belt and Road scheme was “a way of them describing their economic ambition,” English said of Chinese regional economic development goals. Read more on the initiative here.

There had been no discussions of Chinese workers being brought to New Zealand for specific Chinese-funded infrastructure projects, English said. “We wouldn’t be making any special provisions in that respect.”

South China Sea, RCEP

On other issues, English acknowledged that New Zealand’s stance on the South China Sea was a sensitive one between the two countries. New Zealand’s expectation that the issue should be dealt with under international rules had not changed, he said.

Premier Li had earlier linked the South China Sea issue to the Belt and Road initiative, referencing a planned shipping route through the area to boost trade.

English said he and Li had also discussed the economic interdependence between China and the US. However the Trump administration was not discussed directly, he said.

“We expressed New Zealand’s interest in that being a functional, positive relationship because if it isn’t then it has significant economic and political impact.”

Further to discussions on the NZ-China FTA, English said the parties discussed the RCEP regional trade agreement, which he indicated had hit an impasse as New Zealand sought to keep negotiations commercially relevant and meaningful.

“There’s always a temptation with trade agreements just to agree on whatever. New Zealand has a strong focus on higher quality agreements that really do deliver benefits. With RCEP that’s a bit of a challenge,” he said.

Watch statements from English and Premier Li in the video below, including Li's comments on the South China Sea and steel dumping:

See the FTA announcement from Prime Minister Bill English below:

New Zealand and China will begin talks on an upgrade of the Free Trade Agreement between the two countries on April 25, Prime Minister Bill English announced today.

The announcement followed official talks between the Prime Minister and Chinese Premier Li Keqiang in Wellington today.

“The FTA with China has been an enormous success,” Mr English says.

“Since coming into force in 2008 two-way trade between our two countries has tripled to $23 billion, creating jobs and opportunities for people in both countries. An upgrade will ensure this momentum continues and ensure that the FTA remains a modern agreement that tackles barriers our exporters face. It will assist progress towards our target of $30 billion two-way trade by 2020.

“The agreement to commence of negotiations also confirms the commitment of both countries to open trade and economic growth,” Mr English says.

“Trade openness and strong ties in the region are critical to New Zealand’s economic growth, prosperity, and job creation.”

Mr English says today’s meeting with Premier Li provided an opportunity to reflect on the successes achieved since New Zealand established diplomatic relations with China 45 years ago, and to set the agenda for the future.

“Premier Li and I also reiterated the value we see in people-to-people links between our two countries, including the nearly 35,000 Chinese students studying in New Zealand, and the 400,000 Chinese who visit annually.

“Both countries also confirmed their commitment to open trade, sustainable development, and stability in the Asia-Pacific region.

In addition to agreeing a date for talks to begin on a FTA upgrade, the two leaders also announced a number of other initiatives, including:

• Access to China for chilled meat from 10 New Zealand meat processors, initially on a six-month trial with a view to later expanding trade.
• A climate change action plan, to enable closer cooperation as both countries transition to lower carbon economies.
• Mutual recognition of trusted exporters, which will facilitate faster border clearance times for the recognised New Zealand exporters who already account for nearly half of New Zealand’s $9.4 billion of goods exports to China
• An increase in the number of direct flights possible between China and New Zealand, from 49 to 59 under the Air Services Agreement.
• Frameworks to explore new economic opportunities, including on China’s Belt and Road Initiative, aimed at closer cooperation on regional infrastructure projects, and e-commerce, a growing platform that allows New Zealand companies to sell directly to Chinese consumers
• Enhanced cooperation in a number of areas including agriculture, sustainable fisheries, in the South Pacific, environmental issues, education and training, international development, health research, and intellectual property.
• Agreement to strengthen cooperation on judicial and law enforcement issues, to jointly fight corruption and transnational crime.

This is the Premier’s first visit to New Zealand as Premier, but he previously visited as Vice Premier in 2009.

“It was a pleasure to host Premier Li in New Zealand once again, together with his wife Madame Cheng Hong.

“I look forward to hosting them both at a China-New Zealand Gala in Auckland tomorrow.”

And here's English speaking in a video.