New Zealand Prime Minister Jacinda Ardern will meet with Chinese Prime Minister Li Keqiang at the Great Hall of the People in Beijing, China, on April 1, 2019.
Naohiko Hatta | Swimming pool | Kyodo News | Getty Images
China and New Zealand signed a deal on Tuesday to upgrade their existing free trade pact, giving exports of raw materials from the Pacific nation better access to the world’s second-largest economy.
New Zealand Prime Minister Jacinda Ardern confirmed the signing of the agreement at a press conference on Tuesday, highlighting the importance of the agreement amid a crippling pandemic and global economic crisis.
The pact has been discussed for years and was concluded in November 2019, but was awaiting official signing by China.
New Zealand Trade Minister Damien O’Connor signed the enhanced 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 fit for another decade.
It makes exports to China easier and is expected to reduce compliance costs for New Zealand exports by millions of dollars per year.
The upgrade also means that 99% of the nearly NZ $ 3 billion ($ 2.16 billion) timber and paper trade to China will have tariff-free access, O’Connor said in a statement.
The deal benefits New Zealand exporters of perishable goods such as seafood, the forestry sector and other primary sector industries.
The existing conditions for dairy products have been maintained, with all safeguard levies to be abolished within one year for most products and within three years for milk powder.
“This means that by January 1, 2024, all New Zealand dairy exports to China will be tariff-free,” said O’Connor.
New Zealand was the first developed country to sign a free trade agreement with China in 2008, which has long been touted by Beijing as an example of firsts with Western countries.
China is now New Zealand’s largest trading partner, with annual cross-trade in excess of NZ $ 32 billion ($ 21.58 billion).
But ties have been tested under Ardern’s government when New Zealand criticized China’s influence on small Pacific islands and raised human rights concerns over Muslim Uyghurs in Xinjiang. Ardern also supported Taiwan’s participation in the World Health Organization (WHO) despite a warning from Beijing.
The trade pact with New Zealand is also as Beijing’s ties with neighboring Australia deteriorated after Canberra called for an independent investigation into the origins of the coronavirus pandemic, which was first reported in central China.
Australia has appealed to the World Trade Organization to review China’s decision to introduce high tariffs on Australian barley imports.
New Zealand, which will host the Asia Pacific Economic Cooperation regional summit this year, has said it is ready to help negotiate a ceasefire agreement between China and Australia.