Beijing will upgrade its Free Trade Agreement (FTA) with Wellington today by eliminating tariffs on imported New Zealand wood and paper goods. Following bilateral communications in January 2022, the upgrade will introduce access to tariff-free trade of an additional 12 wood and paper products over a 10-year implementation period.
Upheld in a virtual meeting last week between New Zealand’s Minister of Agriculture Damien O’Connor and his Chinese counterpart Wang Wentao, this improvement of the existing FTA will secure economic co-operation and facilitate international trade confidence. Goods and services trade between the nations flourished in 2021 with New Zealand’s trade drive with China forecasted to reach $50B in 2022. The Chinese government will gain tariff-free access to 99% of New Zealand’s $3B wood and paper industry and Tariff base-rate fees are scheduled to reduce to zero percent along a 10 year time period.
In the short-term, expect compliance costs for immediate trade of paper and wood products to decrease. Reduced transparency in documentation and customs processes, alongside streamlined and direct freight routes, will facilitate this cutback in costs. Expect additional systems of paper and wood liberalization to emerge as successes in recent settlements generate trade confidence.
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Joseph is a Current Developments Analyst with regional expertise in Northeast Asia. He focuses primarily on South Korean-Japanese geopolitics.