Chinese wall on free trade

New Zealand Herald | November 14, 2007

Fran O’Sullivan: Chinese wall on free trade

By Fran O’Sullivan

New Zealand’s public negotiating stance on the important free trade deal with China sometimes seems so opaque it’s tempting to think the Kiwis are "more Chinese" in this respect than their counterparts.

The New Zealand negotiators — officials from the Ministry of Foreign Affairs and Trade (MFAT) — are gearing up for what both sides hope will be final talks in Wellington, where vital trade-offs will be made so that a deal can be signed at top political level before the end of next April.

Despite suggestions at the recent Sydney Apec that talks would occur in mid-November, a date has yet to be set. New Zealand is still waiting for China to signal whether the final set of negotiations will take place at the end of the month, or early December.

Several factors are at play. The missing details concerning the trade in goods (including agriculture) and services and the investment chapter will be finalised in the tradeoffs in the final talks; the Chinese Government has yet to select a successor to Commerce Minister Bo Xilai, and the recent 17th Party Congress in Beijing has stressed that people must come first as the Chinese economy develops.

If the negotiations can be finalised in April in line with the negotiating deadline set by Prime Minister Helen Clark and Chinese Premier Wen Jiabao, Clark will be able to make great play over New Zealand’s achievement in being the first Western developed country to finalise a free trade deal with China.

Business — particularly dairy — will clearly get considerable benefit from wider access to the Chinese market and the removal of some behind-the-border barriers.

Clark and Chinese President Hu Jintao will no doubt discuss the negotiations — even glancingly — when they meet up at the East Asia summit in Singapore next week.

The pair had reaffirmed their commitment to conclude a comprehensive, high-quality and balanced agreement at Apec.

There’s a lot riding on the talks, both politically and from a business perspective.

But judging by the "information bulletin" published on MFAT’s website — several weeks after the 13th and 14 round of talks were concluded — officials are wary of taking the wider public into their confidence.

All the ministry was prepared to give away in its September bulletin was this: "Further progress was made across the negotiations as a whole ... For New Zealand, the key priority in such discussions is to secure high quality rules and commitments which provide for enhanced access and certainty for New Zealanders doing business in China."

Chief China negotiator David Walker emphasises that his team does get down to details in its direct engagement with key sector groups, and organisations like the China Trade Association. And through private talks with particular companies which stand to be affected by the deal.

The Australian Department of Foreign Affairs and Trade (DFAT) takes a more open approach to keeping the Australian public informed about the key issues in its parallel negotiations.

A November 1 update after Australia’s 10th negotiating round, spelled out that while differences had been narrowed and useful changes made to the proposed text — "overall progress in the negotiations continued to be slow".

In particular:
- Market access negotiations on goods (including agriculture) remained on hold pending an improved offer from China; China understood that Australia would not move to detailed tariff negotiations until it got a greatly improved offer. But China was unable to say when that would be.
- Australia was still having to emphasise its producers would not be a threat to China’s farmers on agricultural products such as wool and sugar (wheat and cotton were discussed in earlier rounds).
- Australia was pushing for various trade impediments to be removed such as the approval of Australian meat export establishments.
- China had agreed — in principle — to Australia’s proposal to use change of tariff classification as the principle methodology in the FTA for determining the origin of goods; talks were underway for an e-commerce chapter to the agreement — but China was cautious over Government procurement. It gives preference to domestic suppliers but will open the procurement market to members of the WTO Government Procurement Agreement after it joins next year; intellectual property talks remained on hold (at China’s request) until after the next negotiating round.
- It was agreed to explore mutual recognition agreements for engineering, architecture and construction (services) ... and so forth.

New Zealand’s negotiations do not cover as wide an ambit as Australia’s talks. But there are obvious parallels and negotiators on both sides of the Tasman swap notes on mutually thorny issues.

If the Australian experience is mirrored in the New Zealand talks — our negotiators will have to be careful to avoid being boxed into a corner and agreeing to a lightweight deal simply to score another political "first".

The level of debate within the business sector on the China deal has also been pitiful compared with Australia’s.

In its latest newsletter the Australian Services Roundtable details that movement of people is also a major issue. Australian stakeholders are calling for longer visas for Chinese professionals and other measures to open up the Australian labour market to relieve domestic skills shortages. But the Australian negotiators are treating this as highly sensitive. New Zealand business is silent on the issue.

The importance of the DFAT material is to emphasise the paucity of public information to illuminate the internal debate within New Zealand on what is a substantial policy shift.

At a Government House reception to mark the 35th anniversary of China-New Zealand relations this week, Ambassador Zhang Yuanyuan noted the free trade deal would open "new horizons" for local and Chinese business people. He was in no doubt that the FTA would be concluded. Right now the issue is to make sure the benefit is truly mutual.

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source: NZ Herald