New Zealand China Free Trade Agreement

1
New Zealand China Free Trade Agreement

• New Zealand Delegation Briefing
• Beijing - 6 April 2008

2
Why the FTA is important for NZ

• Increased access to China for NZ trade and
  investment, which will contribute to growth, jobs
  and higher living standards
• Establishes a Framework for
• - resolving any future trade issues
• - discussing and cooperating on labour and
  environment issues
• Better commercial profile for our companies in
  China
• Supports our objectives of broadening relations
  with China and, more broadly, economic
  integration with the Asia-Pacific.

3
Benefits to New Zealand

• Expected to have a strong overall positive effect
  on the NZ economy, with gains to GDP, trade and
  welfare
• Economic benefits through the removal of tariffs
  and reduction of other barriers to trade and
  investment
• Modelling undertaking as part of the Joint Study
  Report suggested that between 2007 and 2027
• NZ exports to China are expected to be between
  approx NZ225-350m higher per year (20-39 above
  baseline)
• Chinese exports to NZ are expected to increase by
  an annual average of between approx NZ50-89m
  (5-11 above baseline)
• In due course a reduction in tariff payments of
  approximately 115m a year.

4
Key Outcomes Goods

• New Zealand
• On entry into force, expected 1 October 2008, an
  additional 200m of NZ exports (currently facing
  tariffs of 5 or less) will be duty free,
  bringing the total percentage of duty free
  exports to 35.
• From 1 Jan 2009, 75 of NZs wool exports will
  enter China duty free.
• By 1 Jan 2012 around 70 of NZ exports to China
  will be tariff free.

5
Key Outcomes Goods Cont

• Over 5 years duties on 621m of current exports
  will be eliminated. This will include tariffs on
  infant milk formula, yogurt, casein, frozen fish,
  methanol, animal fats and oils, apples and wine.
• Over 9 years duties on a further 77m of current
  exports will be eliminated. This includes beef
  and sheep meat, edible offals, sheepskins and
  kiwifruit.
• Over 10-12 years duties on a further 355m of
  current exports will be eliminated. This will
  include tariffs on butter, cheese, liquid milk
  and whole and skim milk.

6
Key Outcomes Goods cont

• By the end of the FTA tariff phase-out period
  (1Jan 2019), tariffs on 96 of NZ exports will
  have been eliminated.
• The remaining 4 are some processed wood and
  paper products on which China did not make
  concessions, as it would have had to extend
  tariff reductions to all WTO members under its
  WTO accession.

7
Key Outcomes Goods Cont

• China
• FTA provides for elimination of all tariffs on
  Chinas exports to NZ by 2016.
• Tariffs in the 6 - 12.5 range will be phased
  out by 2012. This includes products such as
  whiteware, steel, plastics and furniture. Some
  less sensitive textile and clothing products are
  also included.
• Slower phase out for
• Most highly traded clothing and footwear products
  and some textile products (tariff-free by 2016)
  and
• Other clothing, footwear products and certain
  highly traded textile products (tariff-free by
  2014).

8
Key Outcomes Goods Cont

• China cont
• FTA tariff cuts broadly consistent with phase
  outs under other FTAs
• NZ is currently implementing unilateral tariff
  cuts through to July 2009.
• During this period the tariffs under the FTA in
  sensitive product areas will not, in the majority
  of cases, be lower than the tariff under the
  unilateral tariff cuts.

9
Rules of Origin

• Rules of Origin (ROO) ensure that only products
  originating in NZ or China benefit under the FTA.
• The FTA predominantly uses a change of tariff
  classification (CTC) approach to determine
  origin.

10
Certificates of Origin

• Exports to China will require a Certificate of
  Origin.
• These Certificates ensure that products
• Qualify as originating from NZ
• Benefit from tariff cuts and from improved
  customs procedures.
• Customs procedures required to be predictable,
  consistent and transparent.
• In the normal course of events, Customs will be
  required to release originating products within
  48 hours of arrival. Exporters have experienced
  delays of several weeks obtaining customs
  clearance in the past.

11
Key Outcomes Services

• For sectors listed in the services schedules
  (subject to restrictions specified in them) the
  FTA establishes a general obligation of National
  Treatment (service suppliers to be treated no
  less favourably than domestic suppliers) and
  market access (no quantitative restrictions)..
• FTA incorporates Chinas and NZs existing WTO
  services commitments.
• China has also committed to provide National
  Treatment and market access beyond its WTO
  commitments in the following sectors Computer
  and related services, management consulting
  services, Education, Environmental services,
  Sporting and other recreational services, Air
  transport services and Road Transport services.

12
Key Outcomes Services Cont

• The FTA also includes a reciprocal Most Favoured
  Nation (MFN) provision (i.e. each country will
  receive the benefit of any more favourable
  treatment that the other negotiates in future
  FTAs) which applies in specified sectors.
• Both countries have made MFN commitments in the
  following sectors Construction Services,
  Environmental Services, Engineering and
  Integrated Engineering Services, Computer and
  related services, Tourism Services and Services
  incidental to forestry and agriculture

13
Temporary Entry

• For NZ business visitors to China
• Facilitated and more transparent visa processing
  Applications for temporary employment visas
  processed within ten working days of being
  received.
• Extended maximum stay for business visitors in
  specified sectors from 3 to 6 months.
• For Chinese business visitors to NZ
• Extended maximum stay for business visitors in
  specified sectors.

14
Education

• China has made a binding commitment to include a
  selected number of NZ tertiary and NZQA
  accredited education providers on the China
  Ministry of Education Study Abroad website.
• These provisions will directly assist NZ
  education service providers by giving them a high
  degree of certainty that they cannot arbitrarily
  be removed from the website with the result that
  Chinese students are deterred from using them.
• This addresses what has been a major problem in
  the past for NZ education service exporters to
  China.
• Facilitated visa processing for Chinese students
  to be done in 10 working days subject to
  standard requirements.

15
Temporary employment in NZ

• For a maximum of 1,800 at any one time, subject
  to skill-level requirements, and a bona fide job
  offer
• - Max of 800 in specified occupations with
  Chinese
• characteristics (traditional Chinese medicine
  practitioners, Chinese chefs, Mandarin teaching
  aides, Chinese Wushu martial arts coaches or
  Chinese tour guides
• Max of 1,000 in 20 specified occupations included
  on NZs long term skills shortage list. No more
  than 100 in any single sector.

16
Temporary Employment in NZ Cont

• Neither should result in displacement of NZ
  workers and in all cases NZ minimum wage, working
  conditions and health and safety standards will
  apply.
• Currently there are approx 85,000 workers on
  temporary visas with work permits in NZ.

17
Temporary employment in NZ

• Working Holiday Scheme
• For a maximum of 1,000 young skilled Chinese per
  year to enter New Zealand and engage in tourism
  and temporary employment.
• This is, for example, the same capped level
  currently applying to Chile, Argentina, Italy and
  the Czech Republic.

18
Investment

• Established investments will be treated no less
  favourably than domestic investors in like
  circumstances (subject to existing nonconforming
  measures).
• Benefits of commitments made in future FTAs will
  automatically be extended except in respect of
  fisheries and maritime sectors.

19
Investment Cont

• Additional protections will provide certainty for
  investors
• Access to binding third-party arbitration
  procedures
• - Compensation for losses arising from war, armed
  conflict
• and similar situations
• - Protection against expropriation and guarantee
  of fair and
• equitable treatment
• Free transfer of all payments relating to an
  investment, subject to specific limitations.
• Safeguards to preserve NZs right to regulate
  in the interests of public welfare, health,
  safety and the environment.
• Does not alter the provisions of the Overseas
  Investment Act 2005

20
Technical Barriers to Trade

• The FTA aims to reduce the use of technical
  barriers to trade i.e. standards, regulations and
  conformity assessment procedures that act as
  unnecessary barriers to trade.
• Joint TBT committee established to work towards
  joint standards and regulations.
• Both countries encouraged to accept each others
  regulations as equivalent and accept results of
  each others conformity assessment procedures.
• If a TBT dispute arises members can use either
  FTA dispute settlement provisions or those
  available through the WTO.

21
Electrical Equipment Mutual Recognition Agreement

• The FTA includes an agreement on the mutual
  recognition of conformity assessment for
  electrical and electronic equipment (EEEMRA),
  which will make it easier for NZ exporters to
  meet Chinas testing, inspection and
  certification requirements.
• Examples of product categories covered Low
  voltage electrical products electric tools
  Household and similar use appliances and
  electrical lighting appliances.

22
EEEMRA Cont

• Instead of needing to send products to China to
  determine compliance with Chinese standards,
  necessary tests, inspections and certifications
  may be carried out in NZ.
• The EEEMRA will not have any detrimental effect
  on NZ standards for electrical and electronic
  equipment. It preserves the sovereign right of
  each country to set and apply mandatory
  requirements for covered products and to take
  necessary measures in relation to non-compliant
  products.

23
Sanitary and phytosanitary (SPS) measures

• SPS measures designed to protect human, animal or
  plant life or health by preventing the
  introduction of pests and diseases and to help
  ensure food is safe.
• FTA establishes procedures for the resolution of
  SPS issues. It creates a mechanism for
  encouraging recognition of each others SPS
  measures as being equivalent.
• If a dispute arises, each country may choose to
  use the FTA dispute settlement provision or those
  available under the WTO.
• Decisions on matters affecting NZ biosecurity or
  food safety will continue to be enforced strictly
  with our existing regulatory regime and
  international obligations.

24
Intellectual Property

• The FTA has created another avenue of redress for
  businesses encountering problems with protection
  of intellectual property rights, in addition to
  legal avenues.
• NZ rights and obligations in respect of China
  under the WTO TRIPS agreement are actionable
  under the FTA as well as the WTO.
• A consultation mechanism allows NZ to request
  consultations to seek a timely and mutually
  satisfactory solution on any IP issue within the
  scope of the FTA.

25
Intellectual Property Cont

• The parties have agreed to cooperate on
  eliminating trade in goods infringing IP rights
  subject to the laws of each party.
• Each country has also agreed to establish and
  maintain transparent IP rights, regimes and
  systems.

26
Dispute Settlement

• FTA includes a robust dispute settlement
  mechanism to resolve any disputes that arise
  regarding the interpretation or implementation of
  the FTA.
• Provision for the establishment of an arbitral
  tribunal should consultations fail to settle the
  dispute.
• If either country is find to be acting
  inconsistently with the FTA then that countrys
  benefits under the agreement may be suspended or
  it may be required to pay compensation.

27
Government Procurement

• China has agreed that as soon as possible
  following the completion of its accession to the
  WTO Government Procurement Agreement (GPA) it
  will begin government procurement negotiations
  with New Zealand.
• While this is not an immediate outcome it
  represents the first time China has agreed to
  enter into negotiations on Government Procurement
  with any country outside the WTO context.

28
Labour Cooperation MOU

• Negotiated in parallel with the FTA.
• Aims to improve understanding of labour matters,
  encouraging dialogue and cooperation, and promote
  sound labour policies and practices.
• Establishes bilateral consultation mechanism.
• First time that China has negotiated a binding
  outcome in this area.

29
Environment Cooperation Agreement

• Negotiated in parallel with the FTA.
• Aims to encourage sound environmental practices
  and improve the capacity of each country to
  address environmental matters through cooperation
  and dialogue.
• Contains consultation mechanism.
• First time that China has negotiated a binding
  outcome in this area.

30
Treaty of Waitangi Clause

• This provision means that New Zealand retains its
  right to take measures it deems necessary to
  accord more favourable treatment to Maori,
  including in fulfilment of its Treaty of Waitangi
  obligations.

31
Remaining steps

• FTA text and National Interest Analysis (NIA),
  MOU and ECA texts - to be tabled in the House of
  Representatives and then made public on day of
  signature (www.ChinaFTA.govt.nz).
• The FTA, MOU and ECA then referred to Select
  Committee - Select Committee may decide to call
  for submissions before the 17 April recess.
• Before New Zealand notifies China it is ready to
  bring the FTA and MOU and ECA into force,
  enabling legislation will be necessary

32
Remaining steps cont.

• The New Zealand-China Free Trade Agreement Bill
  will amend the Tariff Act, the Electricity Act,
  the Radio-communications Act, the Customs and
  Excise Act and the Fair Trading Act. (No
  legislative action is required to give effect to
  the ECA or MoU)
• FTA planned to enter into force on 1 October 2008
  (last day in 2008 that China is able to implement
  a tariff cut)

33
FTA Outreach

• A series of FTA Road Shows in Auckland,
  Wellington, Hamilton, Christchurch and Dunedin.
• Negotiators will explain the FTA outcomes
• Targeted NZTE workshops on building business
  capability and operating in the Chinese market.
• A range of NZTE activities in China

34
FTA Outreach

• A dedicated website www.ChinaFTA.govt.nz will go
  live as soon as the FTA is signed. It will
  include
• Text of the FTA and associated agreements/MOUs
• Text of a National Interests Analysis for the
  FTA
• - Materials on doing business in China, including
• case studies
• - A tariff finder tool.

35
(No Transcript)
36
(No Transcript)
37
(No Transcript)
38
(No Transcript)
39
(No Transcript)
40
(No Transcript)
41
(No Transcript)
42
(No Transcript)
43
(No Transcript)
44
(No Transcript)
45
(No Transcript)
46
(No Transcript)
47
(No Transcript)
48
(No Transcript)
49
(No Transcript)
50
(No Transcript)
51
(No Transcript)
52
(No Transcript)