18 Apr 2016

John Key leads delegation to China to talk trade

7:00 am on 18 April 2016

Prime Minister John Key and two of his senior ministers will be pushing for greater trade access to China during an official visit there this week.

John Key with Chinese President Xi Jinping in Beijing during a visit in March.

John Key with Chinese President Xi Jinping in Beijing during a visit in March 2014. Photo: AFP

While two-way trade has increased substantially to more than $18 billion since a free trade agreement was signed eight years ago in 2008, many New Zealand businesses still face barriers in the Chinese market.

The Asian nation is New Zealand's number one export destination, accounting for nearly 20 percent of exports.

Mr Key describes the relationship as mature and broader than just being an economic one.

"Now we for instance work together on the provision of aid programmes, as we did in the Cook Islands, and we have defence sharing sort of arrangements in training where I think they'll be sending a ship down for the 75th anniversary of the navy.

"We're talking to them about the potential extradition of people in Zealand and we have more students studying in each other's country."

China's demand for New Zealand products, such as milk powder, has far exceeded the free trade agreement's expectations.

Dairy volume safeguards were often hit within the first few weeks of a new calendar year - meaning any product that was sent afterwards was hit with higher tariffs.

Trade Minister Todd McClay said he was keen to talk about removing those non-trade-barriers.

Todd McClay

Todd McClay Photo: NZ Parliament

He said the FTA needed to be fit for purpose.

"There's a number of New Zealand businesses that have raised some challenges around that. That certainly will have to be part of the discussion."

One industry keen to see trade barriers removed was the red-meat sector.

Chair of meat exporter ANZCO Sir Graeme Harrison said China's regulations were out of date and prevented any exports of premium priced chilled meat from New Zealand.

"We have no access in chilled meat. So for us as a company, chilled is a big part of our business."

He said it was true that New Zealand and China's relationship had matured but what had been supplied to China to date was what that country wanted.

Sir Graeme said it was not necessarily what New Zealand businesses could add a lot of value to.

Stephen Jacobi, from the International Business Forum, warned it would not be plain sailing for New Zealand to get the concessions it wanted in the deal.

He said New Zealanders needed to remember they were viewed as a small player in international affairs.

"That means we've got to work hard on the relationship, it's what we do, it's what the Prime Minister does, it's what the government does.

"But we've always got to be realistic about how important we are to them."

Primary Industries Minister Nathan Guy said he would be fighting for a trade deal similar to what Australia had just negotiated with China - particularly in dairy and meat.

"They've got more of a preferential FTA, so the timing's right. We realise it will take more discussions."

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