Dialogue: China move extends NZ trade horizons

By STEPHEN JACOBI*

November 13 last year may have been a decidedly average day in New Zealand, but it goes down in history as the day the World Trade Organisation welcomed China as its 143rd member.

The WTO is the only global body dealing with the rules of trade between nations. These rules are not imposed by faceless international bureaucrats but negotiated and signed by Governments. WTO agreements provide the legal ground-rules for international trade.

WTO Director-General Mike Moore says China has made tremendous progress in the past decade in reducing poverty, thanks to an economic system increasingly open to trade and foreign investment.

"Now this economy will be subjected to the rules-based system of the WTO, something which is bound to enhance global economic cooperation."



China, the sixth-largest economy in the world, had a GDP 26 times the size of New Zealand's in 2000. Its annual growth rate is the equivalent of adding two New Zealands a year in GDP terms. China is already New Zealand's sixth-most important export market.

So are we onto something?

Trade Negotiations Minister Jim Sutton says China's huge population is looking to educate itself and improve its living standards, meaning there will be a huge consumer market interested in New Zealand products.

China is also committed to substantial tariff cuts. Once they are fully phased in, over five years, they will add up to at least $48 million a year in duty saved on current New Zealand exports.

New Zealand service providers will have improved access in sectors such as education, tourism and insurance. That's good news for language schools, tertiary institutions, in-bound tour operators and Tower Insurance, which has been working hard to establish a market in China.

In terms of agriculture, China has agreed not to introduce export subsidies and to implement WTO biosecurity disciplines. This should relieve recurring problems concerned with New Zealand primary-sector exports such as meat products, live animals and plant products.

China's accession to WTO membership was not all plain sailing. Its Government had to embark on a wide-ranging process of economic and administrative reform to reach the standard set by WTO members and to get agreement from their trading partners. New Zealand was the first OECD country to give its approval to Chinese accession, but right to the end there was bargaining about the terms of our access for wool.

Changing policies and regulations in a country of such size and complexity as China is a huge undertaking.

China's reaction to WTO dispute-settlement procedures will also bear watching. For the first time, China's internal processes and policies will be up for international scrutiny. Established participants in the WTO find this hard enough.

The Chinese leadership deserves credit for taking on the vision of fuller integration into the world trading system.

This can only be positive for the progress of democracy and human rights in China.

Following hard on China's heels was Taiwan as the WTO's 144th member.

The immediate savings for New Zealand on tariff reductions are even greater from Taiwan - $55 million. Like China, Taiwan will open markets in fisheries and forestry products as well as implementing the WTO biosecurity measures.

Trade will for the first time be allowed in products such as liquid milk, squid, Mackerel, persimmons and nashi pears. New Zealand can expect the largest gains in this market to come from the areas of frozen beef, apples, kiwifruit, chilled beef and cheese and butter.

Press reports in Taiwan have suggested interest in negotiating looser trade arrangements with other economies, including New Zealand.

Any such moves will require careful handling by our Government in the light of relations with China.

But a bilateral deal could build on New Zealand's closer economic partnership with Singapore and negotiations with Hong Kong and address remaining Taiwanese import restrictions.

NZ industry will not have to adjust because of China's and Taiwan's accession in the WTO.

That's because we have for a long time granted the same access for China and Taiwan as for other countries.

The challenge now for China and Taiwan is to ensure full and faithful implementation of the WTO agreement and for NZ exporters to take advantage of new markets.

Meantime China, Taiwan and the world will benefit from a WTO that is now truly global in the way it spreads the rule of international trade law.

* Stephen Jacobi is executive director of the New Zealand Trade Liberalisation Network.