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The New Zealand-China Free Trade Agreement: implications for South Africa

Trade Reports

The New Zealand-China Free Trade Agreement: implications for South Africa

The New Zealand-China Free Trade Agreement: implications for South Africa

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Two-way merchandise trade between New Zealand and China has increased since the Free Trade Agreement (FTA) was implemented, but this is a weak test of the FTA per se as virtually all countries have been increasing their trade with China. However, examining Chinese merchandise trade through to the end of 2012 applies a stronger test and confirms that New Zealand’s imports into China were increasing at a rate significantly above the average. This is especially true for agriculture where dairy in particular is booming. These agricultural imports certainly seem to be aided by tariff preferences, and in some instances these gains are likely to be accentuated as the tariffs fade to zero for New Zealand.

Only a very few import lines are not subject to tariff reductions, and these focus upon the special case of wool where other access concessions apply, upon some agricultural lines where New Zealand is not active anyway, and upon some forestry products. Virtually all Chinese imports into New Zealand were duty free or rapidly heading that way, but there is little evidence that this has led to a surge in imports that some predicted.

Examining South Africa’s bilateral trade with China we find that (a) a large percentage of the imports into China are already duty-free mineral-related and natural resource-products, and (b) that while there appears to be some potential gains from agricultural concessions into China these gains may be restricted through the limited abilities of South Africa to supply the Chinese; this is so because no concessions were granted to New Zealand in the two most important agricultural sectors (sugar and maize) and therefore South Africa may have trouble in negotiating in these lines. The great concern for South Africa is that preferential access for Chinese imports of textiles and clothing would decimate South Africa’s domestic sectors that are currently hiding behind a 45% tariff wall.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.


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