The Prime Minister of New Zealand, Jacinda Ardern, will hold a meeting with Chinese Prime Minister Li Keqiang on April 1, 2019 in the Great Hall of the People in Beijing, China.
Naohiko Hatta | Swimming Pool | Kyodo News | Getty Images
China and New Zealand on Tuesday signed an agreement to upgrade their existing free trade agreement, which will give exports of Pacific commodities increased access to the world’s second largest economy.
New Zealand Prime Minister Jacinda Ardern confirmed the signing of the agreement at a news conference on Tuesday, noting the importance of the agreement amid a crippling pandemic and global economic crisis.
The treaty has been discussed for years and was concluded in November 2019, but pending China’s official signing.
New Zealand Trade Minister Damien O’Connor signed the upgraded agreement in Wellington through a ‘virtual signing ceremony’ with Chinese Trade Minister Wang Wentao, who was in Beijing.
New Zealand said the agreement “modernizes” the existing free trade agreement with China and ensures that it remains in place for another decade.
It facilitates exports to China and is expected to reduce New Zealand export compliance costs by millions of dollars each year.
The upgrade will also mean that 99% of New Zealand’s nearly NZ $ 3 billion ($ 2.16 billion) timber and paper trade will provide China with tariff-free access, O’Connor said in a statement.
The agreement will benefit New Zealand exporters of perishable goods such as seafood, the forestry sector and other industries in the primary sector.
The existing conditions for dairy products are maintained, with all protection tariffs to be eliminated within one year for most products, and three years for milk powder.
“This means that by January 1, 2024, all exports of New Zealand dairy products to China will be tariff-free,” O’Connor said.
New Zealand was the first developed country to sign a free trade agreement with China in 2008, long regarded by Beijing as an example of firsts with Western countries.
China is now New Zealand’s largest trading partner, with annual bi-directional trade of more than NZ $ 32 billion ($ 21.58 billion).
But the ties were tested under the Ardern government as New Zealand criticized China’s influence on small islands in the Pacific and raised concerns about human rights over Muslim Uighurs in Xinjiang. Ardern also supports Taiwan’s participation in the World Health Organization (WHO) despite a warning from Beijing.
The trade agreement with New Zealand also comes as Beijing’s ties with neighboring Australia deteriorate after Canberra called for an independent inquiry into the origins of the coronavirus pandemic, which was first reported in central China.
Australia has called on the World Trade Organization to review China’s decision to impose high tariffs on Australian barley imports.
New Zealand, which will host the Asia-Pacific Economic Cooperation Summit this year, said it would be prepared to negotiate a ceasefire between China and Australia.