Thursday, April 25, 2024

Trade heavyweights in Hipkins China delegation

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Taking the temperature of NZ’s largest trading partner
Dairy Companies Association executive director Kimberly Crewther says it is important for the CPTPP not to lower its standards to accommodate China’s candidacy to join.
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Primary exporters are not expecting any market access breakthroughs when Prime Minister Chris Hipkins meets his Chinese counterpart in Beijing this weekend.

Hipkins is set to leave on Friday with a 29-strong business delegation for the first visit by a New Zealand PM to China since Jacinda Ardern travelled there in 2019.

Fonterra, Synlait, Silver Fern Farms, Alliance Group and Zespri represent the country’s largest primary industry interests on the trip.

While no major announcements are expected, there will be plenty to interest those exporting heavyweights during the five-day trip, which also takes in Shanghai and Tianjin.

They will be keen to take the temperature of NZ’s largest trading partner, which is still to regain the growth rates it recorded before the pandemic.

Geopolitical and trade tensions will also be to the fore when Hipkins meets China’s President Xi Jinping on Sunday.

It is over a year since China controversially applied to join the Comprehensive and Progressive Trans-Pacific Partnership trade agreement.

CPTPP members Canada, Australia and Japan have voiced their scepticism over whether China can be relied upon to uphold the standards of free trade required for entry into the 11-country agreement.

Former top trade official Charles Finny said CPTPP countries had allowed China’s request to languish while considering an earlier application by the United Kingdom.

“Until now it has been possible for the CPTPP members to say they are entirely focussed on the UK application, which was first by a long way.

“That was a legitimate argument, but now that it looks like the UK will have its accession ratified at a meeting of CPTPP ministers in Auckland in July, it is going to be very hard for members to maintain that argument for much longer.”

Finny said it is possible Hipkins could come under pressure in his meeting with Xi to pledge NZ’s support for an easier route to membership for China.

“There would be some who would argue that they are too important and we should do what they ask.

“I think that is hugely risky.”

Top of the list of China’s demands would be a free pass to continue its massive subsidisation of its state-owned companies.

“If we were to waive those it means the near certainty that the US would never want to rejoin CPTPP and a lot of others we were hoping would join, like South Korea and Thailand, would not see the point.

“The whole point of CPTPP is we set a high standard so that others will join and we put pressure on the rest of the World Trade Organisation membership to come on board.

“It is going to take many years to get there but if we were to give that away now it would be deeply disappointing.”

Dairy Companies Association executive director Kimberly Crewther agreed it was important for CPTPP not to lower its standards.

“CPTPP was established as an open, plurilateral agreement with the aim of it expanding over time to provide a WTO-plus rules basis across a larger trade area over time.

“DCANZ is pleased to see that there is ongoing interest in CPTPP membership from a range of different economies.

“We support there being a pathway for membership for any economy that can meet the standards of the agreement to support broader trade liberalisation and regional economic integration objectives.”

Crewther said the dairy trade with China is in generally good shape.

Tariffs on milk powders costing exporters $100 million annually are on track to be scrapped on January 1 as scheduled under the 2008 free trade agreement.

The industry has lobbied National and Labour-led governments hard for the tariffs to be phased out earlier.

“Given that it is now within a number of months … we do not see early removal as a realistic prospect,” Crewther said.

Meat Industry Association chief executive Sirma Karapeeva said the industry is in the middle of re-certifying all export licences as part of a major digitisation project being undertaken by Chinese authorities and affecting all fresh food imports into the country.

Karapeeva said the work has not caused any disruption to exports so far.

Access for high-value chilled and other products continues to be restricted for some exporters.  

No announcements on expanding that access are expected during Hipkins’s trip as had occurred during previous trips to China by NZ prime ministers, she said.

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