New Zealand Prime Minister Helen Clark said recently, her mid-May visit to South Korea and Japan will largely focus on earning Free Trade Agreement in line with the landmark Chinese pact which she signed during the first week of this month. The deal with China is expected to abolish all tariffs on New Zealand exports on a phased manner by 2016. As per the pact, one third of New Zealand’s exports to China will become duty-free by end of this year and is likely to generate 50% increase in export turnover year on year for next 10 years. New Zealand’s Trade Minister Phil Goff predicted that by 2019, about 90% of the country’s exports to China would be tariff free.
South Korea and Japan are extracting exorbitant duties for New Zealand’s farm products. Japan is one of the largest trading partners of New Zealand, the trade between the two, amounts to $5.8 billion in last fiscal. Similarly, South Korea too makes huge imports from New Zealand including wood, cheese and fresh fruits and the bilateral trade stands at $2 billion in the last financial year.
A joint New Zealand-Korea feasibility study earlier this year reportedly found, a FTA between the two countries would bring considerable economic growth to both nations. The new developments notwithstanding, South Korea’s President Lee Myung-bak and Japanese Prime Minister Yasuo Fukuda have already met each other, purportedly prior to the next month trade talks with New Zealand.
On Monday Clark stated, China’s willingness to sign an agreement of free trade should become a harbinger for future pacts, indirectly referring that she is expecting similar concessions from South Korea and Japan. She also added the business would go to where opportunities are aplenty and doors wide open. Both countries cannot afford to take China’s concessions lightly because China’s two-way trade with New Zealand is higher than that of both. South Korea is understood to be lenient on the merit of the recent study, whereas the protectionist Japan is most unlikely to succumb to the overtures of Clark.