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Tuesday, 28 September 2021 11:55

NZ welcomes China's bid to join Asia/Pacific trade deal

Written by  Peter Burke
Stephen Jacobi says China's move signals it's open for further trade reform. Stephen Jacobi says China's move signals it's open for further trade reform.

There's been generally positive reaction to China's announcement that it will seek membership of the Comprehensive and Progressive Agreement on Trans Pacific Partnership (CPTPP).

The CPTPP is a free trade agreement between Australia, Brunei, Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietname which was signed by the 11 countries in March 2018.

The executive director of the NZ International Business Forum, Stephen Jacobi, described the move by China as a welcome expression of its interest in further trade reform. He says trade agreements like CPTPP are about the spread of effective and up-to-date trade rules in the Asia Pacific region as well as globally. He says the CPTPP clearly provides for the accession of new members who can demonstrate they can meet its high standards and is a pathway towards a future Free Trade Area of the Asia Pacific.

He says NZ and China already have a high quality trade agreement that has recently upgraded. He says both countries are cosignatories of the Regional Comprehensive Economic Partnership (RCEP), which includes other Asian countries such as South Korea, Indonesia, Thailand and the Philippines.

"When the remaining dairy safeguard tariffs are completely withdrawn from 1 January 2024, NZ will enjoy very favourable market access into our largest trading partner, China," he told Dairy News.

"It is therefore well placed to meet NZ's expectations for the elimination of tariffs and non-tariff barriers. For the CPTPP bid to be successful, China will need to demonstrate its ability to meet the high standards of other aspects of the agreement, including in relation to competitive neutrality to state owned enterprises," he says.

The issue of the dairy safeguard tariffs is one that the Dairy Companies Association of NZ chairman Malcolm Bailey is interested in. He says this is an issue the dairy industry would want to see addressed quickly if China were to join the CPTPP.

When the China/NZ FTA was negotiated in 2008, China insisted on safeguard clauses being inserted into the FTA. This means that once dairy exports to China reach a certain threshold, tariffs kick in.

The problem is these were set at a level which in 2008 looked good in NZ, but is clearly out of date given the volume of dairy exports to China today. As Jacobi says, under the revised China/NZ FTA these are due to be phased out in 2024. Such tariffs cost NZ millions of dollars.

But Bailey says if China wanted to make quick progress to join the CPTPP, he'd like to see the issue of the safeguard clauses become part of that negotiation.

"In principle I am supportive of China's approach. Every expansion of the global trade agenda is a good thing and there is a strong correlation to opening up trade and welfare of people worldwide," Bailey says.

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