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Clark set to sign deal with China

The Dominion Post, Wellington

Clark set to sign deal with China

26 February 2008

By Tracy Watkins

New Zealand is poised to sign a trade deal with powerhouse economy China, in what is being touted as our biggest trade breakthrough in 25 years.

But its reception here may be rocky, with Government support party the Greens opposing any deal in protest at China’s human rights and environmental breaches.

NZ First has expressed alarm at the possible free movement of unskilled labour from China.

The agreement, once signed, seems assured of majority political support, however, after National’s foreign affairs spokesman, Murray McCully, confirmed the party had been regularly briefed and supported the move.

Details of the deal are still under wraps, but studies put its worth at an estimated $200 million to $400 million-a-year over the next 20 years.

That compares with the estimated $1billion a year often touted as the benefit of a free trade deal with the United States, though that has slipped off America’s radar for the immediate future. There is dispute in Australia over whether its estimated $2 billion gain from a free trade agreement with the US has materialised.

While the Government says its China deal still faces hurdles, including legal and translation issues, Prime Minister Helen Clark’s confirmation yesterday that arrangements were well under way for her visit to Beijing in April is a clear indication that those hurdles are considered minor. She underscored the significance of the deal.

"Obviously it would be New Zealand’s largest trade deal since Closer Economic Relations [with Australia] was signed in 1983 and it would be China’s first with a developed country."

The Government has been pursuing a trade deal with China since 2004 but has refused to give progress reports because of sensitivity on both sides about the nature and scale of any concessions they might give.

But it is likely that the major win to New Zealand exporters will come from the elimination of tariffs on agricultural exports - possibly phased out over time - and other products. Some of those tariffs are as high as 20 per cent.

However, Miss Clark hinted yesterday at compromises in a sign that the hoped-for liberalisation of rules surrounding exports to China may not be as sweeping as New Zealand had hoped.

One of the major criticisms has been the impact on New Zealand manufacturing and jobs, with groups including the Council of Trade Unions warning that it could force companies to move production overseas.

Miss Clark rejected that criticism. There was already a huge trade imbalance. China took $1.9 billion in New Zealand exports last year, compared with $5.6 billion in the other direction.

"China has very open access to our market now.

"The key breakthrough with an agreement with China will be us getting some reciprocity, because we do face some quite significant tariffs on key exports into that market," she said.