China and New Zealand have decided to sign a revised Free Trade Agreement (FTA) after years of negotiations. China agreed to larger quotas and tariff adjustments while New Zealand agreed to increase its export of dairy products.
Talks between China and New Zealand have progressed that both parties are ready and willing to sign an upgraded FTA, reported New Zealand Herald.
Since 2018, negotiations between the nations seemed far from the conclusion when Beijing initially refused to lower tariff rates on dairy products. New Zealand also had lesser leverage to offer China.
Negotiations on the upgrade had been brought up as early as 2016. It was the eighth and last round of negotiations between the two countries.
At present, both parties have shown their willingness to sign an upgrade to the FTA. Trade Minister for New Zealand David Parker did not give specific details on when the deal would be finalized but shared that both parties are looking forward to announcing an exact date soon.
An official announcement as to the date may be released this weekend at the East Asia Summit.
The upgrades to the FTA would benefit exporters of paper and wood products. Both countries have agreed to eliminate the export certification requirement on these goods. This would result in diminished compliance costs.
The upgrades would also be advantageous to companies who wish to expand their trade with China as well.
China may also relinquish the requirement of certificates in dealing with imports from New Zealand altogether. Initially, in 2008, the prevailing FTA required these exporters to fill out a certificate of origin. It must also be certified by the Chamber of Commerce or any authorized body. In fact, in other agreements, it is easier for importers to self-certify their products. With the new upgrades, the certification requirement between New Zealand and China may be waived.
Dairy exporters in the past have raised their concern about not being able to maximize their quota due to the tariff constraints of the previous FTA terms.
Hoping to surge their trade with China in the near future, these exporters may also expect a larger quota on their exports other than doing away with the certification requirements.
There are, however, threats to the finalization of the upgraded FTA. According to a report on Newsroom, New Zealand officials have called their government to develop their trade talks with the United States and the European Union as well. The report raised that this could be a hindrance to the FTA's finalization given that China is involved with a trade war against the US.
