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Sealing the deal with China

Published: 3:58PM Monday April 07, 2008

With the stroke of a pen half a billion dollars could be injected into the local economy after the signing of a historic free trade deal with China.

The agreement makes New Zealand the first western nation to sign such a deal with the world's most populous country.

Details of the deal were unveiled at a signing ceremony at the Great Hall of the People in Beijing on Monday afternoon (New Zealand time).

Trade Minister Phil Goff inked the deal on behalf of New Zealand with Chen Deming, his Chinese counterpart, who did the same for China as it entered into its first FTA with a developed nation.

The deal promises to boost the New Zealand economy by up to $350 million a year, with 96% of tariffs on goods gradually eliminated, including on agricultural products.

Tariffs on exports to the world's most expansive economy will start coming off in October and be completed in 12 years.

China will make up to $70 million a year off the deal.

"This is a big deal, there hasn't been a trade deal like this with China done by anyone before," says  Prime Minister Helen Clark.

Critics opposed to the deal predict it will see a flood of Chinese workers into New Zealand.

"We believe that migration should be kept out of trading agreements," Council of Trade Unions vice president Sharon Clair says.

But Clark, currently in Beijing, says that immigration gates will not be thrown open. "I'd be very confident of that, for a start some of those positions are absolutely reserved for traditional Chinese areas of speciality whether it's medicine or Chinese chefs," she says.

The deal also allows up 1800 skilled Chinese workers to be in New Zealand at any one time.

Workers allowed in will be involved in speciality areas and others will work in areas where New Zealand has specified skill shortages.

Nurses, plumbers, electricians are among those categories and the PM is adamant they are needed in New Zealand.

"Providing they have got the necessary qualifications I'm afraid we do, we are very short of skilled people," says Clark.

The Chinese workers will not be required to speak English but won't be able to stay more than three years. However, the numbers are small given the temporary workers already in New Zealand.

"The 85,000 people currently working here come from over the globe, they come from Africa, they come from the Middle East, they come from Asia, they come from Europe," Trade Minister Phil Goff says.

Some critics also believe it is wrong to do a free trade deal with a country with poor environment and labour standards. They point to the current brutal suppression of Tibet and the massacre in Tianamen Square in 1989.

But Prime Minister Helen Clark is shrugging off the criticism.

"If we were to only trade with countries who are of common mind with us it would be a pretty small group. No one suggest you don't trade with Britain because they invaded Iraq. No one suggest you don't trade with France because they once did nuclear testing in the South Pacific," Clark points out.

The government believes passing up a world-first trade agreement would leave New Zealand behind as the rest of the world courts a super power whose influence shows no sign of waning.

New Zealand businesses are happy with the deal with New Zealand exports to China are expected to grow by a whopping 40%.

Chinese imports to New Zealand are expected to grow 10%, but China is possibly using New Zealand as a test case before moving forward with larger developed nations.

For the business delegation looking on the key focus was on the economic gains. Nearly all tariffs on NZ exports will be gone within 12 years and Fonterra chairman Henry van der Heyden says it will mean "we will receive higher revenue for our product which has got to be good for farmers".

Parliament is yet to vote on the deal and it is not known yet whether Foreign Minister Winston Peters will support it because his New Zealand First party is against deals with low wage economies.

However, Labour and National have joined forces in a rare move  and the historic document is expected to come into effect by October with the first tariff cuts likely to be before the end of the year.