Hong Kong a new link in our free trade agreements
Dominion Post, Wellington
Hong Kong a new link in our free trade agreements
By Vernon Small in Singapore
14 November 2009
New Zealand has added Hong Kong to its patchwork of free trade agreements.
Officials see the deal as an important third leg to free trade arrangements between New Zealand and China and between China and Hong Kong.
Although tariffs are already negligible, Hong Kong is a crucial window into China, the main player in a region expected to be the engine room of global growth in the next 20 years.
Prime Minister John Key said it represented another link in the chain of FTAs in the region that already included Malaysia, China, Asean countries and Thailand.
With Hong Kong heavily focused on its services sector, a FTA, which would be signed next year, would benefit the hi-tech and education sectors, he said.
Hong Kong is New Zealand’s ninth biggest export market and eighth biggest source of foreign direct investment. Trade with Hong Kong is worth about $820 million.
"It’s another gateway into the Asian region and it’s an extension of the patchwork quilt that we are weaving in the trade area," Mr Key said.
Trade Minister Tim Groser said New Zealand was increasingly seen as a free trade trailblazer.
Hong Kong chief executive Donald Tsang said the deal could be used as a template for FTAs with other countries in the region.
As Mr Key and Mr Groser turn their sights to deals with Korea and India next year, talks on the margins of this week’s Asia-Pacific Economic Cooperation summit have delivered little progress in what Mr Key calls the "obvious and gaping hole – the United States".
Hopes are high that President Barack Obama will make positive signals about expanding the Trans-Pacific Partnership, which links New Zealand, Singapore, Brunei and Chile, in Singapore this weekend.
After failing to secure a formal bilateral meeting with Mr Obama at the Apec summit, Mr Key used a one-hour meeting with US Treasury Secretary Timothy Geithner on Thursday to press New Zealand’s case.
If Mr Key succeeds in having an informal chat with Mr Obama at the leaders’ summit tomorrow, free trade would be at the top of his agenda, he said.
But there were big hurdles and free trade was not first priority for the US, where health reform and climate change was more pressing.
"Over time they are cautiously optimistic but I can’t tell you whether that will be in 48 hours or 48 months, but there is an acceptance and a willingness to see progress on trade," Mr Key said.
He has rejected the suggestion that New Zealand should turn away from the US and concentrate efforts on Asia.
Meanwhile, Mr Key told a business chief executives summit that many economies were "breathing pure oxygen" in the form of massive government stimulus packages that would soon have to be phased out.
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His Government had been forced to sharply rein in government spending increases over the medium term to bring rising public debt under control.
Developed countries needed to re-orient their economies away from credit-fuelled domestic consumption toward exports, he said.
The formal part of the Apec leaders’ summit begins today with a retreat at the swanky Istana Hotel.
The summit will wrap up tomorrow with a final declaration expected to stress that the global economic recovery is not yet on a solid footing and that economic stimulus packages should be maintained.
