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Leaders of New Zealand and China have signed a Free Trade Agreement (FTA), marking the first time a developed country has entered into a free trade agreement with the communist nation. The pact will phase out most tariffs between the two countries by 2019.
“Over time this FTA will result in the elimination of tariffs on 96 percent of New Zealand exports to China, and is estimated to lift New Zealand’s export revenue from China between US$180 to US$280 million (NZ$225 to NZ$350 million) every year,” New Zealand Prime Minister Helen Clark said in a statement.
Currently, exporters from New Zealand face a 10 to 20% tariff when trading with China.
However, the FTA will not only affect trade on goods, but services as well. Business visitors from New Zealand will be allowed to stay in China for up to six months, rather than the current 90-day maximum.
In return, New Zealand has promised to provide faster processing of student visas and will allow up to 1,800 skilled Chinese workers per year to enter New Zealand.
The agreement was the result of 15 rounds of negotiations over three years.
New Zealand has been criticized for signing the agreement due to current international outcry against China’s treatment of Tibet.
Parliament member Keith Locke expressed concerns with the agreement’s timing. “We shouldn’t be signing a free trade agreement on the back of the Tibetan people and their rights to be free of Chinese domination,” he said in ONE News.
The trade pact has not been embraced by New Zealand citizens either. A ONE News/Colmar Brunton poll, taken before the FTA was signed, revealed that 49% of New Zealand voters were opposed to the treaty; 39% were in favor; and 12% were undecided.
However, Ms. Clark maintained that the agreement “promotes co-operation in a broad range of economic areas, and also provides a platform for further engagement at the governmental, cultural and people-to-people levels.”
In a written interview with the Xinhua News Agency, Ms. Clark said the agreement was “an important outcome for New Zealand.”
“It demonstrates that we can work effectively with one of the world’s major economies,” she said.
New Zealand’s Minister of Foreign Affairs and Trade Phil Goff agreed. He said in a statement that “the FTA will give New Zealand businesses a distinct advantage over competitors into that market.”
The FTA is scheduled to become effective by October of this year, pending final approval from both nations.