On
January 26, 2021, on behalf of China, the Chinese Minister of Commerce, Mr.
Wang Wentao, signed a protocol with Damien O'Connor, Minister for Trade and Export
Growth of New Zealand, on upgrading their Free Trade Agreement (FTA). This has
been the first update since the FTA was signed twelve years ago.
Minister of Trade and Export Growth of New Zealand, Damien
O'Connor, indicated that with the economic confusion caused by the COVID-19 situation,
the FTA upgrade is part of New Zealand's trade recovery strategy to answer the
economic impact caused by the coronavirus. He also emphasized that the
relationship with China is always one of the most important diplomatic
relationships of New Zealand. The FTA upgrade is expected to bring more
benefits to the businesses and people of China and New Zealand.
In the amendment to the FTA are new stipulations regarding
online and offline competition, as well as environmental standards.
Furthermore, the revised FTA will include new rules for customs protocol and
the sourcing of product materials.
Chinese duties on New
Zealand dairy products to be eliminated within three years
The FTA upgrade will retain the current stipulations for dairy
products. While the safeguard duty of most of the products will be canceled
within one year, the safeguard duty of milk powder will be canceled within
three years, which means that all dairy products imported to China from New
Zealand will be exempt from customs duties from January 1, 2024. This will
bring large benefits to dairy enterprises in New Zealand.
Official data from New
Zealand shows that China invested a total of 340 million US dollars in New
Zealand in 2019, and China was considered to be the second largest source of
foreign capital. It is believed that the FTA upgrade will attract more Chinese
investment to New Zealand after taking effect.
According to some public records, New Zealand is the largest
dairy product exporting country in the world. The total dairy export volume of
New Zealand accounts for 1/3 of the global dairy trade. Data from Chinese
customs shows that from January to November, 2020, China imported 306,700 tons
of baby formula milk powder from other countries, with 63,800 tons of milk
powder from New Zealand, which accounts for 20.8% of the total dairy import
volume in China, becoming China's second biggest customer after Europe. Dairy
products from New Zealand also rank first in the imported dairy market in
China.
China's new partnership
with New Zealand puts pressure on Australia
A dairy analyst in China pointed out that the FTA upgrade makes
it convenient for China to import dairy products from New Zealand, brings more
benefits to the customers, and also helps develop Chinese dairy enterprises in
New Zealand. In addition, China and New Zealand's signing of the Regional
Comprehensive Economic Partnership (RCEP) will improve the relationship between
China and Australia.
Since 2020, Australia has
prevented the export of agricultural products such as lobsters, wine, wood, and
beef to China. Nowadays, the FTA upgrade brings more advantages to New Zealand,
which will give a hard blow to Australia's agricultural and dairy market.
According to a news report from Australia Broadcasting Corporation, on January
24, Minister for Trade, Dan Tehan, said that he has sent positive news to China in the
hope that he could break the ice on trades between China and Australia and create
more opportunities for trade.
For more information,
please check our resources on Dairy
Products China.