PM admits backdoor imports risk

By BRIAN FALLOW

Prime Minister Helen Clark yesterday acknowledged concerns that a proposed trade deal with Hong Kong could open a back door to cheap imports from the rest of China.

"As with Singapore, where similar issues arose, we believe Hong Kong would have as much interest as we would in strictly enforcing rules of origin," Helen Clark said.

Rules of origin govern the degree of local content or value added required for goods to qualify for access under a free trade agreement. Under the Closer Economic Relations pact with Australia it is 50 per cent; under the Closer Economic Partnership agreement with Singapore it is 40 per cent.

Apparel and Textiles Federation chief executive Paul Blomfield said firms in that sector were not confident Customs had the resources or the expertise to monitor compliance with rules of origin effectively.

When they had raised similar concerns about third-country back-door entry in the case of Singapore, they say they were fobbed off with assurances like, "Don't worry. Customs has a strategy."

As the Singaporean agreement came into effect only on January 1, it was too soon to tell how effective the rules of origin provisions were proving in practice, Mr Blomfield said.

The apparel, textiles and footwear industries are enjoying the respite provided by a weak dollar and a freeze on tariff reductions.

The current tariff is 19 per cent, though it is due to be reduced to zero in two steps between 2004 and 2006.

Under the Basic Law governing Hong Kong's relationship with the rest of China, Hong Kong remains a separate customs territory, able to negotiate trade agreements, belong in its own right to bodies like the World Trade Organisation, and issue its own certificates of origin.

But like most busy ports only a fraction of the goods crossing its customs frontier can be inspected.

Ministry of Trade and Development official Peter Hamilton said that if the two Governments agreed to move to formal negotiations, extensive consultation with business groups, unions and Maori would be undertaken.

Helen Clark will be discussing the question of a trade deal when she visits Hong Kong on April 17.

"We may have more to announce when I am there."

Asia 2000 Foundation executive director Tim Groser said that although the WTO remained the main game in trade liberalisation, it was important that New Zealand kept involved in the expanding matrix of bilateral agreements.

Mr Hamilton said: "How comfortable would we feel if Australia negotiated free trade agreements with the United States or Thailand and we were not there?"