Trade Update November 2019
22 Nov 2019 | BusinessNZ
ExportNZ: November Trade Update
China – NZ Free Trade Agreement (FTA) Upgrade
The Government is to be congratulated on completing the negotiations on an upgrade of the 2008 FTA. This is particularly good news for forest products exporters. There are useful gains on trade facilitation and some aspects of our services agreement.
Agreement on the text of the RCEP Agreement was reached in Bangkok in early November but two things were missing – India and market access commitments. These are usually the most continuous part of any FTA but negotiators seem confident that these commitments will be finalized by February.
The decision of everyone to proceed with RCEP, but without India, greatly diminishes the value of the agreement for New Zealand as New Zealand already has FTAs with the other RCEP members. There may be some marginal improvements in services commitments from existing FTA partners, but we are not expecting substantial forward movement. The positive is that we have 15 economies agreeing the same set of trade rules and rules of origin. The fact that Japan, Korea and China now have an FTA linkage is good for the politics of North Asia. North Asia is an area of critical importance to New Zealand.
It is strange that market access negotiations on RCEP have not been completed before agreement on the rules. This is unusual. We suspect that this is to do with a small number of the parties to the agreement, as opposed to the full fifteen. Market access has been a matter of some contention between Japan, Korea and China. It is possible that these three need more time to finish the bilateral negotiations necessary to agree to these commitments.
China – US
The finalization of the much-expected US-China trade deal is proving difficult. This was expected by the time of the (now cancelled) APEC Leaders’ Meeting. The agreement would forestall threatened tariff increases, but there still seem differences over what the agreement would mean for the tariff increases already in place. There is some disquiet in the US about the limited nature of what is on the table. This agreement will not be delivering the structural changes that many were hoping for.
Most recently, the US Senate has passed a law supporting Hong Kong’s protestors and imposing sanctions on those Chinese and Hong Kong government officials “responsible for eroding Hong Kong’s autonomy and human rights violations”. China has promised, in the past, to retaliate for any such law. This could complicate finalization of the trade talks.
NZ – EU
Preparations are underway for the next round of negotiations on the FTA. We are not anticipating any improvement in the EU market access offer at this stage. Negotiations on geographic indications will be interesting.
New Zealand is still negotiating the future of EU quota commitments in a post-Brexit world in the WTO. New Zealand is not the only country to have concerns on this matter.
All eyes on the UK election
Contact: Catherine Bread