NZ - Korea free trade deal some time away
21 April 2006
By RUTH HILL
New Zealand and Korea’s $2 billion two-way trade could be in danger of stagnating if New Zealand is shut out of future free trade agreements, the 22nd annual meeting of the Korea-New Zealand Business Council (KNZBC) was told yesterday.
However, it appears there is "little political will" in Korea to enter formal negotiations with New Zealand, in the next couple of years at least, diplomatic sources said.
New Zealand Governor-General Dame Silvia Cartwright, who is in Seoul on a four-day state visit, yesterday told an assembly of about 150 Korean and New Zealand businesspeople that two-way trade between the two countries had increased "a thousand-fold in the last 30 years".
Korea is New Zealand’s sixth biggest trading partner, and two-way trade totalled $2.098 billion in the year to June 2005. However, there were "significant barriers" to trade, she said.
"A bilateral free trade agreement (FTA) would be a logical addition to the longstanding and warm relationship that exists between our two countries," she said.
"It would open new opportunities for co-operation, collaboration and mutual economic benefit."
The film industry, and research science and technology were key areas for growth.
New Zealand also had "a very welcoming and open attitude towards foreign investment", she said.
"We have a simple tax system, a transparent and stable trading environment, and an innovative and entrepreneurial business culture."
She cited The World Bank report, Doing Business in 2005, which ranked New Zealand "the easiest country in the world to do business".
Some Korean investments in New Zealand included property, hides and skins, tourism, timber, food processing, deer velvet, fisheries and small businesses, while New Zealand investments in Korea were mainly in the education and agricultural sectors.
Yet there remained "significant untapped potential", Dame Silvia said.
While New Zealand and Korea were "old friends", successful businesspeople knew one "should never fall into the trap of complacency".
"We must keep looking for new opportunities to take the relationship forward."
She was preaching to the converted: the KNZBC has strongly backed a FTA between the two countries for a number of years.
The chairman of the Korean chapter of the KNZBC, Lee Keum-ki, said both New Zealand and Korea relied on international trade and were "strong proponents of trade liberalisation".
One of the tasks of the delegation was to "foster trade links", he noted.
However, his New Zealand counterpart, Richard Worth, said that while trade links between New Zealand and Korea had grown strongly, things were in danger of stagnating if the relationship did not progress.
"The region is awash with FTAs," he said.
The republic has already signed agreements with Chile, Singapore and four European countries, and is currently negotiating with Mexico, the United States, Canada, India and Asean countries.
Private talks are under way with China.
Negotiations with Japan have stalled recently as diplomatic relations between the two countries have cooled in a scrap over some islets in the Yellow Sea, to which they both lay claim.
Mr Worth said that while FTAs have obvious benefits for the negotiating parties, "relationships with countries who are not part of the agreement can be damaged".
In fact, Korea’s FTA with Chile has already hurt some New Zealand kiwifruit exporters, who are charged higher tariffs for their goods.
"That’s why an FTA is needed to consolidate the relationship we have built up over the past 50 to 60 years."
Speaking to NZPA earlier in the week, New Zealand Ambassador Jane Coombs said both New Zealand and Australia were working hard at getting Korea interested in FTAs - but she admitted the timing was "open ended" by necessity.
"Korea is currently concentrating on negotiations with the United States and Canada - the chase is on to see who will be in the `second tier’ of countries after those are concluded," she said.
The deadline for the US agreement is July 2007.
"We are at the stage of explaining the issues, getting more information, discussing the material benefits."
She said last month’s visit by Agriculture Minister Jim Sutton to put New Zealand’s case to the National Assembly was "very, very useful".
However, Ministry of Foreign Affairs (MFAT) officials in Wellington cautioned there was a very long way to go.
The head of MFAT’s North Asia Division, David Taylor, the former ambassador to Korea, said there was "little political will" for a FTA with New Zealand as yet.
"Agriculture is a very sensitive area in Korea," he said. "And despite the fact we are not a rice-producing nation, we are seen as a threat."
Dame Silvia said she saw her role in all this as "reinforcing relationships and friendships" in order to open the way for talks. Businesspeople themselves also had a vital role to play, she added.
"The Korea-New Zealand Business Council is very positive, and that’s a factor, there’s great enthusiasm at the shop-floor level."