I’m running a bit late with Chinese New Year good wishes, but 新年快乐 / 新年快樂 (Xīnnián kuàilè) to all members of the New Zealand Food & Grocery Council and readers of FMCG Business of Chinese descent.
I hope the Year of the Ox is a fortunate one for all parts of our industry. It will certainly bring challenges, as we’ve seen with the supply chain challenges and the recent COVID lockdown in Auckland.
It’s been 25 years since I first visited China as consultant to the New Zealand Wool Board in 1996. At that time, I was asked to visit knitting yarn factories in Hohot, Tianjin, and Shanghai to talk about marketing, technology and yarn fashions.
The factories were impressive, 10 times the size of New Zealand’s textile factories, and they ran at a fraction of the cost. Note to self, I thought at the time, the New Zealand wool industry is going to become even tougher. And so it proved. Like many Kiwis who have spent time in China, that pace of development has been extraordinary and the contrasts marked.
One of the highlights for New Zealand has been the Free Trade Agreement with China. We were the first country to sign with them, and the rewards of the partnership have been both economic and social. They’re now our biggest trading partner, with two-way trade jumping from $8 billion in 2008, to more than $32 billion. Our exports (mostly dairy, meat, wood, tourism and education) are worth $19b, while our imports (mostly electronics, machinery, clothing, and furniture) are worth $13b.
There’s no doubt the FTA has been transformational, enabling us to maintain our standard of living. Which is why the upgrade signed last month is so critical, continuing as it does to ensure our trade with the world’s biggest economy remains leading edge and the best deal for our exporters.
The upgrade delivers a 98 per cent free trade focused on reducing compliance costs by millions of dollars a year, and easing access. For example, there will now be a six-hour “clearance time” for our perishable goods, such as seafood, at the Chinese border. And exporters will have key staff they can contact at Chinese ports to iron out any issues.
Commitments to promote environmental protection and ensure environmental standards are not used for protectionist purposes have also been introduced. They’re described as the most ambitious and highest level of environmental commitment China has agreed in any FTA.
As well, 99% of our $3b wood and paper exports will have preferential access, with tariff elimination over a 10-year period on additional wood and paper products worth $36 million. There are also agreements that enhance cooperation in electronics, commerce, competition policy, and government procurement.
Crucially, existing conditions have been maintained for dairy, with safeguard tariffs due to be eliminated in just over a year, and by 2024 for milk powder. This will give us the best access to China for dairy products of any country – and in a world where dairy competition is fierce, that’s massive.
Our trade with China is an example both of our growing standing in and reliance on the Asia Pacific region that will be further highlighted this year when New Zealand (COVID allowing) hosts APEC 2021 and its focus on trade in the region. Our influence at APEC is down primarily to great work by many, including the APEC Business Advisory Council led by Rachel Taulelei.
The importance of trade to New Zealand was neatly summed up by Executive Director Stephen Jacobi when reviewing the COVID year: “There is little doubt that trade saved New Zealand’s economic bacon in 2020 …”
I have no doubt nurturing and respecting our relationship with China will continue to play a huge part in that.
(originally published in FMCG Business magazine)