In April 2008, China signed a free trade agreement (FTA) with New Zealand, denoting the first FTA between China and a developed country. A protocol for upgrading this 2008 FTA (hereinafter the "upgraded protocol") took effect on April 7, aiming to facilitate bilateral trade and investment and further open the markets for wood and paper products between both countries.
Since the original FTA between the two countries took effect, bilateral trade has seen a surge. China has maintained the status of New Zealand's biggest trading partner, biggest export destination and biggest source of imports for many years. In 2021, their bilateral trade volume hit a record $24.72 billion, up 36.4 percent year on year and 5.6 times that of 2008.
Following high-level modern international trade rules, the upgraded protocol, apart from optimizing the trade rules stated in the 2008 agreement, also marks intensified cooperation in the fields of e-commerce, competition policy, government procurement and the environment.
The two sides are committed to further increasing mutual market access, consequently extending most favored nation treatment to more areas. China will further expand its opening up in sectors including aviation, education, finance, senior care, and passenger transport to New Zealand to boost trade in services. New Zealand, then, will further open up its legal services, projects and centralized project services to China. The upgraded protocol covers digital certificates, online consumer protection and network data, paperless trading, and so on. Both sides will jointly help businesses expand their markets through e-commerce, with a particular focus on small and medium-sized enterprises.
New Zealand will lower its threshold for reviewing Chinese investment, allowing it to receive the same treatment as members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The reviewing threshold for Chinese state investors is NZD100 million ($64.4 million) and that for non-government investors is NZD200 million ($128.9 million), while the original reviewing threshold stated in the FTA was NZD10 million ($6.4 million).
The upgraded protocol's market opening-up and high-level rules will mainly help in three aspects.
First, the promotion of trade in goods. The reduction of tariff and non-tariff barriers, as well as the implementation of an array of trade liberalization rules, will help cut trade costs and improve customs clearance efficiency, consequently expanding trade and consolidating industrial supply chains.
Second, the expansion of investment cooperation. A lower reviewing threshold for investment will cut trade costs on the part of Chinese investors in New Zealand and create a more transparent and stable investment environment.
Third, more space for economic and trade cooperation. Newly added post-border cooperation articles, like those on e-commerce, will help boost digital trade between the two countries and enhance their respective competitiveness in international trade.
The upgraded protocol came into effect on the 50th anniversary of the establishment of bilateral diplomatic relations between China and New Zealand this year, revealing a strong willingness on both sides to consolidate and expand bilateral trade by deepening the free trade partnership.
China's rapid economic growth has pushed up domestic production costs and launched more of its businesses onto the international market. The great potential of China's market and its economy will help to inject new vitality into the economic growth of New Zealand. As China is accelerating its outbound investment, New Zealand, with its incomplete industrial chain, may expect to broaden the space for bilateral investment. In this sense, lowering its threshold for reviewing Chinese investment will provide more opportunities for Chinese businesses to tap into the New Zealand market. And that's a win-win.
Copyedited by Elsbeth van Paridon
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