Taiwan strikes free trade deal with NZ | Connect Asia

Taiwan strikes free trade deal with NZ

Taiwan strikes free trade deal with NZ

Updated 11 July 2013, 17:10 AEST

Taiwan has signed a free trade agreement with New Zealand, its first such accord with a developed economy.

The agreement was signed in a low-key ceremony at Victoria University in Wellington.

Taiwan's has been seeking free trade agreements with its trading partners while former rival China has joined more regional economic blocs.

Presenter: Richard Ewart

Speaker: Phil Goff, Foreign Affairs and Trade spokesman for New Zealand's opposition Labour Party

GOFF: It would not have been possible of course without a free trade agreement between New Zealand and China which I signed as then minister of trade in April 2008. Having a comprehensive free trade agreement with mainland China, which is their first and still their only free trade agreement with a developed country, meant that we were subsequently able to forge a free trade agreement with Hong Kong and now finally with Taiwan. It's comprehensive: immediately that we bring the deal into effect, the tariffs will be removed off nearly half of all of our exports to Taiwan, and after four years that'll be up around 98-99 per cent. So it's a comprehensive removal of tariffs, it involves the broadening of an air services agreement, which removes the cap of the number of flights between the two countries each week. That will be potentially good for our tourist industry, and it sets a framework for television and film co-productions which will allow quite vibrant industries on both sides to work closely together. So for us it means pretty quickly that there'll be 40 million dollars a year that we currently pay in tariffs that will be lifted. But it means much more than that, it means a broadening of the economic relationship between the two countries, and a further free first mover advantage for New Zealand in terms of its exports into Taiwan.
EWART: It's interesting that you say that the deal has come about because of the free trade agreement that was already signed with because this deal does seem to have been dealt with fairly quietly shall we say, not a great deal of razzamatazz surrounding the signing, that people might suggest that it would be quite a sensitive issue, but from what you're saying you would say not?
GOFF: Look you can be sure that the commencement of the negotiation and the conclusion of the negotiation, the signing of this deal was done with the full knowledge and indeed concurrence of the Peoples Republic of China, we work on a no surprises deal with the Peoples Republic of China. It's currently our biggest export market, eclipsing Australia in the first three months of this year, and no government would jeopardise the trading relationship with a major country like the Peoples Republic of China by entering into a free trade agreement with Taiwan unless there was an acknowledgement on China's side that they had no objections to this deal. We don't have diplomatic relations with Taiwan, we have what's called a cultural and industrial office in Taiwan and they reciprocate with a trade and cultural office here. So the deal wasn't signed between government ministers, it was signed by officials and it was signed on a neutral ground, which was the Victoria University of Wellington.
EWART: So at this stage then a government-to-government agreement would have been a bridge too far perhaps for China, but they're prepared to go along with the deal as it's been put together, and does that suggest that relations are changing both between China and Taiwan but internationally on this issue?
GOFF: Well the relation, I was in Taiwan earlier this year and the relationship between the Kuomintang government in Taiwan and the mainland government in the Peoples Republic of China is actually quite a good one, ironically since the founder of the KMT was Chiang Kai-shek, former president of China before the communist takeover in 1949. But that relationship has certainly eased. That can't be guaranteed to continue because the major opposition party in Taiwan, the DPP, has a policy that at least potentially contemplates a declaration of independence from China. China sees Taiwan of course as a province of China, which historically is correct. They've worked out a reasonable way of getting along at the moment, but a political change in Taiwan could change all that. And it could again become a fairly tense hotspot in the politics of the Asia Pacific area.
EWART: Bearing in mind you've signed these two ground-breaking deals effectively; one with China and now another with Taiwan, can I perhaps invite you to speculate as to why Australia is still struggling to sign a free trade agreement with China and the pressure apparently is on now to get that deal done after eight years of assumingly going nowhere?
GOFF: Well I probably can't speak for Australia on that, other than to say that I think Kevin Rudd is absolutely right in wanting to lift the momentum to try to get a deal with China. As the minister that negotiated the deal with China I think it had a lot to do with building the wider relationship. In China things aren't simply business, it's about guanxi, which is Chinese for relationships. And you develop a relationship before you have a business connection, and that's a traditional and cultural part of the way in which China goes about things. So we worked very closely with China, Mike Moore was World Trade Organisation Director General at the time of their accession into the WTO. We were the first country to sign an agreement for their accession to the WTO. We were the first country that recognised them as a market economy, we were then the first country in the developed world to commence negotiations and then conclude them. And I think it was on the basis of a good relationship and also it's hard I guess for China to feel threatened, one-point-three-billion people on one side of the negotiating table and four-point-three million on our side. But nevertheless it was a tough negotiation, we pushed very hard and a pre-condition for that. The total phasing out of tariffs on our dairy products, and we achieved a comprehensive agreement with China, which even included deals on trade and labour and trade and the environment, building into our free trade agreement international standards for labour and international standards for the protection of the environment. So I think it was a good success for New Zealand, it was based on good faith, it was based on our mutual interests and the fact that our economies are complimentary. We produce things that China needs. We'd already removed most of the tariff barriers to Chinese goods coming into our country, and that certainly then opened the way for the subsequent deal on free trade with firstly Hong Kong and now with Taiwan.

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