NZ and China free trade talks to start within weeks

1.00pm

New Zealand and China will begin free trade negotiations within weeks and a bilateral agreement could add up to $400 million a year to the New Zealand economy, Prime Minister Helen Clark said yesterday.

"This means more jobs and long-term prosperity for New Zealanders," she said following a meeting with Chinese President Hu Jintao in the Chilean capital Santiago where they are attending the Asia Pacific Economic Co-operation (Apec) summit.

Helen Clark said she was pleased at the level of political engagement China had given to the free trade agreement (FTA) process.

"This is a concrete demonstration of the strong bilateral ties that our government has developed," she said in a statement.

New Zealand is the first developed country to launch FTA talks with China -- which has one of the world's fastest growing economy -- and the first to recognise it as a market economy.

A feasibility study carried out into the potential FTA found New Zealand exports of goods and services to China between 2007 and 2027 were expected to grow between $260 million and $400 million a year.

Chinese exports to New Zealand in that period were expected to grow between $60 million and $100 million a year.

"This is an opportunity to level the playing field and create new opportunities for exporters," Helen Clark said.

The study identified challenges would be faced by a number of sectors in both countries, she said.

"But the government is confident these can be addressed."

Meanwhile, news of the negotiations has been greeted with mixed reactions.

Fonterra's director government and trade, Philip Turner said while multilateral trade liberalisation through the World Trade Organisation was Fonterra's foremost objective, bilateral agreements could also deliver benefits.

"It is strategically critical for New Zealand to be inside the most dynamic zones of economic growth around the world, of which China is certainly one."

He said China was one of the top four or five customers worldwide for Fonterra.

However, Council of Trade Unions (CTU) president Ross Wilson said the announcement did nothing to allay union concern about fears job losses from any deal.

The CTU, he said, had highlighted "atrocious labour conditions of many Chinese workers" in its submission over the feasibility study into a FTA.

It was now urgent for the government to work with unions and employers in the manufacturing sector to ensure any trade deal did not cost manufacturing jobs, Mr Wilson said.

"At a recent business meeting in Auckland to discuss the proposed trade agreement one New Zealand company based in China boasted that the wage bill of their 22 expatriate staff was the same as the total wage bill for their 2500 Chinese workers.

"It is this attitude that is of extreme concern to unions if the trade agreement accelerates greater relocation to China of some of the 300,000 New Zealand manufacturing jobs, " Mr Wilson said.

The first round of negotiations was expected to be held in Beijing, China, in the first week of December.

No date has been set for when the negotiations will be completed.

Helen Clark is expected to have a brief "pullaside" meeting with United States President George Bush today when she will express New Zealand's interest in a bilateral FTA.

- NZPA