KEY POINTS:
China's top leadership wants the new trading relationship with New Zealand to expand well beyond agricultural commodities into new areas such as co-operation on climate change policies and technology to mitigate carbon exposure.
This was indicated in formal talks at the Great Hall of the People in Beijing yesterday before the signing of the historic free trade pact between the two countries.
Prime Minister Helen Clark and Chinese Premier Wen Jiabao described the agreement as a major step that would deepen New Zealand's relations with the emerging economic superpower.
"The Premier is looking for new areas to develop trade between us," Helen Clark said.
"He has highlighted China's interests in working together on climate change policies and expanding environmental services in the China market."
Premier Wen's signal is a feather in the cap for a Prime Minister who wants New Zealand to be "carbon neutral".
New Zealand businesses represented in Beijing reacted positively to the idea of co-operation on climate change with China, which has become one of the world's biggest polluters.
Helen Clark said the free trade agreement opened the door for New Zealand business to step up the pace in China.
"We've scarcely scratched the surface with what's possible."
New Zealand's flag was fluttering alongside China's when Helen Clark arrived in Tiananmen Square for her red-carpet welcome by Premier Wen.
Their talks went well beyond the appointed signing time of 11.30am (Beijing time), so the contents of the free trade deal were public on news media websites well before it was signed by Trade Minister Phil Goff and Chinese Commerce Minister Chen Deming.
"It's a huge day for Kiwi business," said Business NZ chief executive Phil O'Reilly.
China has agreed to a sweeping programme of tariff reductions that will ultimately result in 96 per cent of New Zealand's exports to it being tariff-free.
The first tariff cuts will start on October 1, once Parliament gives its formal approval.
The agreement is expected to be worth up to $350 million a year to New Zealand through tariff reductions and market openings.
And it bestows "favoured-nation status" on New Zealand, giving exporters easier access to markets and less stringent non-tariff barriers.
New Zealand did not manage to totally overcome Chinese sensitivities about exposing its fledgling dairy industry to tougher competition from NZ dairy giant Fonterra.
It has put a "safeguard" clause into the deal that will arrest tariff reductions for some dairy products if China's farmers fail to adjust.
Fonterra chairman Henry van der Heyden said his co-operative would have liked a faster reduction in tariffs, but the deal was still a major plus for New Zealand's largest exporter.
Helen Clark was not optimistic that Foreign Minister Winston Peters' party would back the deal.
The New Zealand First caucus is expected to decide its stance at its meeting in Wellington today.
But Helen Clark would not let the prospect that her Foreign Minister might ultimately oppose a major move by her Government take the gloss off the momentous day.
She raised human rights issues with Premier Wen and said there was "no cross-over" as far as she was concerned between the free trade deal and the Tibetan crisis, rejecting suggestions New Zealand had traded silence on the Chinese crackdown in return for the trade deal.
* PACT ON THE FAST TRACK
What happens next to the trade agreement:
The agreement and its accompanying national interest analysis will be tabled in Parliament today and sent to a select committee.
The foreign affairs, defence and trade select committee will quickly - possibly as early as tomorrow - call for public submissions on the agreement.
A tight deadline will be set for submissions to be sent and heard. It is likely the select committee will have to choose which ones it will hear because there will not be enough time to hear them all.
The committee will report back to Parliament, possibly expressing a view on the agreement. That could happen as soon as the end of next month.
The Government will then immediately introduce legislation to enable the trade agreement's measures to be put into action.
The legislation will be sent to a select committee, which will again call for public submissions.
The Government wants the agreement to be in force on October 1, which suggests the legislation will be dealt with rapidly.
Finally, political parties will vote on the enabling legislation that will allow the deal to be put into action.
