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The study has identified specific ways in which liberalisation of trade in goods, services and investment would enhance trade and economic cooperation between China and New Zealand, and reinforce the two Governments' commitment to sustainable development. The study has also identified concerns that would need to be taken into account in the negotiation of an FTA.
The likely net benefits of an FTA have been confirmed by the economic modelling work undertaken during the course of this study. This suggests that bilateral trade between China and New Zealand will grow significantly, that production and welfare gains will flow to both the Chinese and New Zealand economies, and that there will be positive impacts for the goods and services sectors in both China and New Zealand. Over a 20-year period from 2007 to 2027, Chinese exports to New Zealand are expected to grow by an annual average of between US$40-70 million per year. New Zealand exports to China are expected to grow between US$180-280 million per year over the same period. In percentage terms, this equates to China's exports to New Zealand increasing by between 5 and 11 percent above the baseline. New Zealand's exports to China are expected to be between 20 and 39 percent higher than the baseline over the 20-year period. Over this timeframe the FTA is expected to deliver US$24.7 billion of total welfare gains to China (a maximum of 0.17 percent above the baseline) and US$2.3 billion of gains to New Zealand (a maximum of 0.55 percent above baseline). Bilateral investment is also expected to grow.
The study also notes the potential importance of a bilateral FTA for both the WTO and APEC processes. An FTA between China and New Zealand should therefore advance APEC goals, and be fully consistent with WTO rules.
This study also identified a range of areas of potential disciplines or cooperation with thepotential to facilitate bilateral trade in both goods and services and investment. These include several cross-cutting issues and a range of topics set out in chapter six. It is recommended that these issues should be addressed in the negotiation of an FTA.
Tariffs in China and New Zealand restrict bilateral trade. The study recommends that an FTA should remove tariffs on goods traded between China and New Zealand. While the study demonstrated that the removal of tariffs would benefit both China and New Zealand, the study also identified concerns about possible negative consequences for some producers from tariff removal that should be taken into account in negotiations.
While tariffs are a significant barrier to bilateral trade, a range of non-tariff barriers (NTBs) are identified in the study that also have a restrictive effect on trade. The economic modelling work undertaken during the course of this study has indicated that removal of unnecessary non-tariff measures would accrue benefits equivalent to the liberalisation of tariffs. The non-tariff barriers in question are identified in chapter three. The study recommends that the removal of unnecessary non-tariff measures (NTMs) and the negotiation of improved disciplines and enforcement in areas such as customs procedures, standards, and sanitary and phytosanitary measures should be a priority for these negotiations.
The services sector is an important component of trade between China and New Zealand and opportunities for liberalisation of this trade have been identified in chapter four of this study. The study also notes the generally open nature of New Zealand's services regime, and the major opening of China's services sectors associated with China's WTO accession in late 2001. Taking these factors into account, the study recommends that an FTA should further liberalise bilateral trade in services for the benefit of both countries.
Bilateral investment linkages between China and New Zealand are growing. The study identifies in chapter five a range of ways in which further liberalisation and cooperation could facilitate increased levels of investment between China and New Zealand. The study recommends that building on existing cooperation, an FTA should further liberalise bilateral investment.
A range of institutional issues would also need to be discussed in an FTA negotiation. This list is not exclusive, but would need to include issues such as dispute settlement, review and consultation clauses, general exceptions (including clauses on New Zealand's Treaty of Waitangi), relationships to other international agreements, relationships with taxation and immigration policies, entry into force, termination, and other standard treaty clauses. These issues were not canvassed in detail in this study but will need to be addressed in negotiations.
This study has demonstrated that significant complementarities exist between the Chinese and New Zealand economies and that an FTA would benefit the people and economies of both countries. To secure these benefits and build on the long and warm relationships between the two countries, this study recommends that negotiations on an FTA between China and New Zealand covering goods, services and investment should commence as soon as possible.
