KEY POINTS:
New Zealand manufacturers who get their goods made in China could see a benefit from the upcoming free trade deal with the world's fastest growing major economy.
Industry experts tip a further reduction on the tariffs imposed on a small proportion of Chinese goods arriving into New Zealand, as a trade-off for greater access to the Chinese market for our products.
This would likely have benefits for New Zealand companies manufacturing in China for the domestic market here.
Most goods arriving in New Zealand incur no tariffs, but some - such as clothing, textiles and shoes - still face up to a 15 per cent surcharge. An already scheduled programme of tariff reduction will see that reduce to 12.5 per cent in July, and to 10 per cent in July next year.
That is tipped to reduce even further for Chinese goods upon the signing of the Free Trade Agreement on Monday - a point some see as the death knell for manufacturing in New Zealand.
But the industry body, the Employers and Manufacturers Association, sees otherwise. Manufacturing division manager Bruce Goldsworthy said its committee had talked extensively over the past three years with the Government's free trade negotiations team and saw positives in the deal.
"Essentially we are now part of the global market. Ninety-five per cent of everything that comes into this country comes in duty free.
"The value of [tariffs] as a protective mechanism for our companies is actually relatively small when you consider the movement in the exchange rate that we've had over the last 18 months or two years."
The 10-year foreign exchange average of the kiwi against the greenback was 57.5c, as against the current trading level of around 80c, he said.
"You've got about a 40 per cent movement in the exchange rate. The actual import duty pales into insignificance in so far as the competitive environment or the protection that it affords is concerned."
New Zealand has little to give away in a free trade deal, he said, while China has tariffs of between 10 and 20 per cent on our agricultural products, and between 9 and 30 per cent on manufactured goods.
An easing on those rates for New Zealand manufacturers would give them a headstart against competitors from other countries.
Goldsworthy said New Zealand companies who make their products in China and bring them back to the market here would also stand to gain from a tariff reduction domestically.
One such company is shoemaker Kumfs.
Managing director Andrew Robertson said the company already makes about two-thirds of its range in China, so the largest proportion of its business will be "positively affected".
The company still has a staff of nearly 100 at its Mangere Bridge factory, but Robertson, whose grandfather David co-founded the company nearly 70 years ago, said production was well down.
At its peak in 2002, the factory was making about 7000 pairs a week. Now it churns out around 3000.
