Dominion Post, Wellington

Trade agreement with Taiwan a first

By Hamish Rutherford

10 July 2013

New Zealand will today become the first OECD nation to strike a free trade deal with Taiwan, promising to remove tens of millions of dollars in annual trade tariffs faced by exporters.

After more than a year of negotiation, the deal is understood to eliminate close to 50 per cent of export duties from day one, rising to close to 100 per cent over the next four years.

Initially, this will strip out costs of $50 million a year, rising to about $90m a year over the next four years.

In the year to June 30, 2012, Taiwan was New Zealand’s 12th-largest trading partner, however the island nation, which has a population of 23 million, has spent years in the top 10.

Primary goods typically face tariffs of 20 per cent to 25 per cent, although on some products, such as fresh milk or deer velvet, the duties are up to 500 per cent.

Reports from Taiwan predicted the deal would increase two-way trade between the countries by up to $1.6 billion a year.

Today’s deal is the first free trade deal to be signed in more than three years, but the Government appears intent on giving it a deliberately low profile because of the sensitivities with mainland China.

Officially, both Taiwan and China claim sovereignty over the other, a situation which has lasted since the Communist Party took control of mainland China and established the People’s Republic of China in 1949.

China, now one of New Zealand’s largest trading partners, makes adhering to a One-China policy a pre-condition of diplomatic relations.

New Zealand has a strict "no surprises" policy with China over its relationship with Taiwan, keeping it informed of developments.

Careful not to appear to recognise Taiwanese sovereignty, the deal will be between New Zealand and the "Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu", the name used by Taiwan when it joined the World Trade Organisation.

Known as an "economic co-operation agreement" rather than an free trade agreement, the signing is not expected to take place at Parliament and it is unclear whether any government ministers will attend.