New Zealand is famous for its highly competitive business conditions, including ranking number one in the World Bank Group’s Ease of Doing Business report. The Oceanic island-nation is consistently one of the most transparent countries in the world, and dependence on New Zealand’s export economy has driven successive governments to seal new trade deals and agreements with key partners.
In November, New Zealand signed off on an upgraded free trade agreement (FTA) with its biggest trading partner: China. This partnership, which has seen New Zealand exports almost quadruple since its founding in 2008, reaches historic levels of bilateral commitment and offers new opportunities for importers and exporters on both sides.
We explore the outcomes for businesses operating in and trading from New Zealand as a result of this landmark deal.
International trade relations: New Zealand and China
Bilateral relations between New Zealand and China began in 1972, and the two countries signed their original free trade agreement in 2008. This historic relationship was the first of its kind between China and a developed nation. As China and the surrounding region experienced a significant economic boom between 1979-2017, this relationship and others like it with Asian nations became of increasing importance to New Zealand.
New Zealand’s Asia-centric foreign policy agenda has resulted in strong ties with major and emerging powers in the region. China is now the country’s largest trading partner. Between them, their total import and export activity reaches NZ$32 billion. Chinese students represent the largest demographic of New Zealand’s international student population, and the country welcomes Chinese holidaymakers as their second-largest source of tourist revenue by country.
In 2016, the two countries agreed to begin negotiations to upgrade their free trade agreement to better align it with changing global economic contexts. This opens up opportunity for New Zealand business to enjoy stronger preferential access to the second largest economy in the world.
Key New Zealand exports and imports
According to the New Zealand Ministry of Foreign Affairs and Trade, New Zealand exports the following key goods and services to China:
- Dairy products
- Meat products
- Wood products
- Financial services
- Transportation services
- Cereal, starch and flour preparations.
From China, the New Zealand mainly imports:
Free Trade Agreement upgrade outcomes
Negotiations for this upgraded free trade agreement have spanned four years. On 3 November, New Zealand Prime Minister Jacinda Ardern and Chinese Premier Li Keqiang signed the revamped deal during the East Asia Summit in Thailand, which took place over 2-4 November.
Making trade easier for New Zealand business
Key wins for New Zealand from this new deal include:
- reducing compliance costs for New Zealand exports by millions of dollars each year
- giving preferential access to 99% of New Zealand’s wood and paper exports to the Chinese market (currently valued at around NZ$3 billion) for the next 10 years
- the highest level of commitment from China to meet environmental objectives seen in any other free trade agreement.
New Zealand will support Chinese visa-seekers by modifying regulations for certain professions such as Mandarin language teachers and tour guides.
During the Summit and after the signing, Ardern remarked in a press release: “This ensures our upgraded free trade agreement will remain the best that China has with any country.”
As per the original FTA, China will continue reducing safeguard tariffs on New Zealand dairy products. Prime Minister Ardern stated that “this means that by January 2024, New Zealand will have the best access to China for dairy products of any country.”
Nine areas for international trade cooperation
The deal outlines several elements for mutual cooperation, that are identified under 9 areas (taken from the New Zealand Ministry of Foreign Affairs and Trade website):
- Agricultural cooperation
- Technical barriers to trade
- Customs procedures, cooperation and trade facilitation
- Government procurement
- Rules of origin
- Competition policy
Besides main outcomes mentioned above, New Zealand is targeting better cooperation and deals with China for its service exporters. Some service industries not included in the original FTA are now on the map. New Zealand suppliers to China can expect increased commitments from the global giant to facilitate their commercial operations in the country.
Exporting to Asia made easy
New Zealand boasts a range of highly interconnected relationships with Asia. Of New Zealand’s 10 FTAs currently in force, 9 of them connect the South Pacific island with one or more countries in Asia. This includes:
- Hong Kong
- Association of South East Asian Nations (ASEAN)
- Trans-Pacific Strategic Economic Partnership (P4)
- Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Additionally, New Zealand is also in the process of negotiating free trade deals with India and a group known as the Regional Comprehensive Economic Partnership, which spans 16 countries in the Asia-Pacific (including Australia). The ambitious, international-trade driven country is also seeking an upgrade to its original trade agreement with ASEAN.
Business operating out of New Zealand who are targeting Asian markets therefore have multiple channels for exporting and importing between the regions, and a number of preferential conditions to support their activity.
We can support your New Zealand export/import operations
New Zealand’s upgraded trade deal with China ensures New Zealand businesses get greater access to one of the world’s largest economies, with steadily reducing tariffs for key sectors. Now is the perfect time for companies looking to get a foothold in the Asia-Pacific to consider their options for importing and exporting in New Zealand.
At Biz Latin Hub, our team of experts can help. With our suite of market entry and back-office services, we’ll ensure your company meets its formation and import/export compliance requirements under local law. We can assist with your visa-processing, human resources, and all due diligence needs.
Find out more about how we can support your business entering New Zealand and take advantage of the country’s optimal commercial environment. Reach out to us today at [email protected] for personalized assistance.
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