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Signing of FTA could offer new opportunity
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09:16, April 24, 2008

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The signing of a free trade agreement (FTA) between China and New Zealand on April 7 could give the soon-to-air cartoon Jane and the Dragon a Chinese touch.

That's because the agreement calls for the New Zealand government to provide up to 1,800 work permits annually for Chinese who work in fields where there is a skill shortage, such as traditional medicine and language instruction. The two countries also agreed to establish a scheme enabling 1,000 young, skilled Chinese to enter New Zealand on working holidays every year.

This would provide Chinese students and artists the opportunity to work in New Zealand with special effects artist Richard Taylor, who snapped up four Oscars for the Lord of the Rings trilogy among other accolades, and his staff in his Weta Workshop. Taylor is now working on Jane and the Dragon.

"I believe the FTA is going to bring more focus on the ability for us to bring technical expertise and creativity through cooperation, production opportunities and service providing in the Chinese film industry," Taylor said.

After 15 rounds of talks, the FTA was signed in Beijing by Commerce Minister Chen Deming and his New Zealand counterpart Phil Goff.

Unlike China's previous FTAs, in which trade of goods served as the starting point and other fields later become areas for expansion, the agreement with New Zealand would cover trade in goods and services, and investment from the moment it takes effect. It is China's first such agreement with a developed country.

According to the pact, New Zealand would remove tariffs on 63.6 percent of imports from China once the FTA takes effect. It would then eliminate duties on all imports by Jan 1, 2016. Also, China would nix tariffs on 24.3 percent of imports from New Zealand when the FTA takes effect and would remove tariffs on almost all goods imported from the country by Jan 1, 2019.

"Overall, the FTA reduces barriers to our trade with China," New Zealand Prime Minister Helen Clark said. "It promotes cooperation in a broad range of economic areas and also provides a platform for further engagement at the governmental, cultural and people-to-people levels." Clark said the signing was a "historic" moment.

New Zealand would provide preferential treatment to Chinese businesses in service industries from 16 categories across four sectors, including business, architecture and education. China has made a similar commitment in 15 categories across four sectors, including business, environmental protection and transportation.

Ministry of Commerce spokesman Wang Xinpei said: "The signing of the agreement is aimed at boosting the economic development of the two countries and benefiting people on both sides."

A number of businesses from both countries, such as Weta Workshop, are ready to reap the benefits of the agreement, believing the FTA creates new business opportunities in the other country.

Jeremy Moon, CEO of wool apparel manufacturer Icebreaker, believed the FTA would help the company sharpen its competitive edge by ensuring its supply channel and reducing costs.

Moon's Icebreaker now employs about 1,000 workers in China and produces some 2 million garments per year with Shanghai Challenge Textile, its Chinese partner and the New Zealand-based firm's only manufacturing facility in the world.

Moon said that because its factory imports thousand of tons of wool from New Zealand every year, his company would benefit from the FTA.

"New Zealand will be given an additional 25,000 tons quota for wool import plus the global allocation to the country," he said. "It makes our supply chain more secure."

On the other hand, the factory in Shanghai exports at least 15 percent its products back to the company's home market. New Zealand's garment tariff - currently 18 percent - would be lowered to 15 percent in July, 10 percent next July and would be scrapped altogether in five years.

Simon Myers, director of operations with AuCom Electronics Ltd, a soft start motor control technology product maker, said his firm would also benefit from the FTA. He believed AuCom would acquire a larger market share in China as tariffs diminish from the current 10 percent to zero by 2012.

New Zealand trade minister Goff said the FTA's impact would extend beyond trade to enhance exchanges in tourism, education and investment.

The New Zealand government has initiated a "beachhead" program providing investors with information about the Chinese market to help New Zealand firms, most of which are comparatively small, tap the Chinese market.

China's FTA with the island country is also expected to set an example for other trade partners.

New Zealand's close ties with Australia could increase pressure on Canberra to conclude a deal, experts said. Australia's negotiations with Beijing have not made headway after 10 rounds of talks.

"If Australia can't strike an agreement with China as soon as possible, some of its business with China may go to New Zealand," said Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation.

Source: China Daily

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