Chinese trade agreement need not hurt NZ industry, says Minister

By KEVIN NORQUAY

Local apparel manufacturers may not be as badly hurt by a free trade agreement (FTA) with China as is feared, Trade Minister Jim Sutton said yesterday.

Concerns for New Zealand workers were raised after the Government announced FTA negotiations with China could be concluded as early as next year.

FTA negotiations raised a raft of serious issues for New Zealand workers, Council of Trade Unions president Ross Wilson said.

Unions would seek Government assurances that tariff protection for the textile, clothing and footwear sector would be maintained until 2010 as already agreed, he said.

Green Party co-leader Rod Donald decried the FTA as "bad news for workers and the environment in both countries".

"Workers in Guandong are paid as little as US$1 ($1.54) an hour for 16-hour days," he said.

"Workers in New Zealand shouldn't, and won't, compete with such sweatshop conditions."

Mr Sutton told a press conference that New Zealand jobs in the apparel industry need not be at risk, even though about 50 per cent of clothing imports last year were from China.

"A good many of those are already entering duty free because of the particular categories they are in," Mr Sutton said.

"The impact of further tariff reductions might not be as great as you would think at first glance.

"We are confident we can mitigate any adverse impacts to a high degree.

"Our apparel industry...has made very significant adjustments following the liberalisation that has been occurring since the mid 80s.

"In the last few years employment in that sector in New Zealand has been improving."

Mr Donald queried New Zealand shelving its concerns with human rights in China in order to secure a free trade agreement.

Prime Minister Helen Clark said New Zealand was already buying goods from China and it was a task for China to change over time.

"What (New Zealand) can do is be part of the growth which is China today," she said.

But Mr Donald told NZPA trade sanctions had led to the end of apartheid in South Africa and could similarly help stamp out human rights abuses in China.

Mr Sutton said the economies of China and New Zealand complemented each other.

He said other major trading partners Australia and the United States have exportable surpluses of things New Zealand produced.

"We need big markets for those things which we are the world's most productive at producing and (China needs) reliable sources of supply for things that they will never be self sufficient in."

An FTA agreement was worth potentially "hundreds of millions" to the economy, Mr Sutton said.

"I emphasise this is the beginning of the process, no offers are on the table yet."

Ministry of Foreign Affairs and Trade staff would carry out negotiations that follow rapid progress since discussions in October last year between Miss Clark and President Hu Jintao of China.

New Zealand was the first nation to back China joining the World Trade Organisation (WTO) and it was now the first developed country China had agreed to negotiate an FTA with, stealing a march on Australia.

Pressed by reporters, Mr Sutton optimistically suggested an FTA could be clinched as early as next year. Negotiations are not due to start until early 2005.

Any free trade deal with the world's sixth-biggest economy -- and fastest growing major economy -- would most benefit exporters of wool, dairy goods, wood and wood products, and hides and skins.

China last year replaced Britain as our fourth-largest export market, after Australia, the United States and Japan.

Its milk powder tariffs can be up to 10 per cent, with wool facing duties of 38 per cent, meat 15 per cent, and kiwifruit up to 20 per cent.

China also imposes significant tariffs on dishwashers, fridge-freezers, air conditioners and carpet.

New Zealand exports to China have doubled in the past six years to $1.38 billion in 2001, not counting over $1 billion of services.

A trade and economic cooperation framework (TECF) must be completed for a formal signing in June.

More detailed analysis of the likely impact on trade and the wider New Zealand economy of a free trade deal with China will be carried out, and public submissions invited.

The TECF will cover the start of the FTA study, FTA negotiations, and associated market economy pre-conditions required by China.

Imports from China totalled $2.21 billion in 2001 -- headed by clothing, electrical machinery, machinery, toys, sports equipment and footwear.

Agricultural producers Fonterra welcomed "rapid progress" towards establishing an FTA with China, as did Federated Farmers.

Wellington Regional Chamber of Commerce chief executive officer Philip Lewin said it made very good strategic sense to enter the negotiations.

Miss Clark said a successful WTO round remained the top trade priority.

However, the Clothing Workers Union said a free trade agreement with China would be "economic madness" and cause serious job losses.

"China is such a dominant player in New Zealand's clothing imports that a free trade agreement with China will be the same as abolishing tariffs on all clothing imports," said union secretary Maxine Gay.

"Yet at the same time, New Zealand manufacturers are still facing tariff duties of around 30 per cent on clothing exports to the US or the EU."

She said women would pay the price through job losses and wage cuts, and the impact would be felt in smaller centres around the country.

But miss Clark said New Zealand's clothing industry was not competing with Chinese-made products.

"It has been restructuring to take itself right up-market, to be a much higher value producer," she said on Newstalk ZB.

"We have a very, very successful clothing industry, particularly at the high fashion end of the market and that's the way the whole industry has to go."

- NZPA