Since the signing of the bilateral free trade agreement, the economic and trade cooperation between China and New Zealand has been deepening and expanding, and agricultural trade is an important part of it. This year marks the 50th anniversary of diplomatic ties between China and New Zealand. The upgraded protocol of China New Zealand Free Trade Agreement also officially entered into force this year. The implementation of the Regional Comprehensive Economic Partnership (RCEP) will bring new opportunities and challenges to the development of China's agricultural trade.
1、 New Zealand Agriculture Overview
New Zealand is an island country located in the southwest of the Pacific Ocean. Animal husbandry and livestock product processing are the pillar industries of the national economy. In 2021, New Zealand will cover an area of 270000 square kilometers, of which livestock production will cover 135000 square kilometers, accounting for half of the land area; The cultivated area is 600000 hectares, accounting for only 2.2%.
（1） Production and trade of agricultural products in New Zealand
In 2021, New Zealand will produce 22.24 million tons of milk, 1.615 million tons of whole milk powder and 470000 tons of butter. As of June 2021, there are 25.969 million sheep, 6.282 million cows and 4.025 million beef cattle on hand. The export competitiveness of agricultural products in New Zealand is strong. The export volume in 2021 will be 30.67 billion US dollars, of which the export of livestock products will account for about 60%, mainly dairy products, beef and mutton, wool, etc; The import volume was 5.93 billion US dollars, mainly including pork, animal feed, wheat and chocolate.
Table 1 Export of New Zealand's main livestock products in 21
Product export volume (10000 tons) accounts for the proportion of output (%) accounts for the world export volume
Specific gravity (%)
WMP 162.0 100.3 72.7
Butter 43.5 92.6 44.7
Cheese 37.2 95.4 12.6
Fresh milk 27.0 1.2 7.9
Beef 67.5 90.6 5.8
Source: US Department of Agriculture
（2） New Zealand's signing of free trade zones
New Zealand has been actively pursuing the strategy of free trade area. At present, 12 free trade agreements have been signed and entered into force, and 33 countries or regions, including Australia, ASEAN, China, Chile, South Korea, Japan, Taiwan, China, are free trade partners with each other. In addition, negotiations between New Zealand and the EU Free Trade Area have been completed on June 30, 2022, and the Free Trade Area with the Russian Federation is currently suspended (see Table 2).
（3） Current situation of agricultural products trade in China Singapore Free Trade Zone
First, the trade scale developed by leaps and bounds. Since the China Singapore Free Trade Zone came into effect in 2008, the scale of bilateral agricultural trade has expanded rapidly, with an average annual growth rate of 20%, which is far higher than the 9% growth rate of China's global agricultural trade in the same period, and also higher than the 14% growth rate of China Singapore bilateral trade in goods. In 2021, the volume of bilateral agricultural trade between China and New Zealand will reach 11.55 billion US dollars, an increase of 25.6% year on year, more than 9 times the scale of bilateral agricultural trade in 2008. Since 2013, China has always been New Zealand's largest agricultural trading partner. In the first half of 2022, the total trade volume of agricultural products between China and New Zealand will be 5.84 billion US dollars, with a year-on-year growth of 11.2%. Among them, China's imports of agricultural products since 1949 totaled 5.71 billion US dollars, up 10.6%; The export value of new agricultural products was 120 million US dollars, up 45.6%. The newly imported butter, beef and butter, as well as the newly exported cigarettes, gelatin, spices and cod fillets, have increased significantly.
Second, the role of agricultural "ballast" is fully highlighted. It has positioned itself as an economy highly dependent on agricultural exports, with an export dependency of about 24%, of which agricultural exports account for more than 80% of the total export of goods. Since the China New Zealand Free Trade Zone came into effect, the proportion of agricultural products trade in China New Zealand goods trade has increased from 25% in 2008 to 47% in 2021, of which the proportion once exceeded 50% in 2020. The booming trade in agricultural products between China and New Zealand has enabled the leaders of both sides to achieve the goal of "reaching 30 billion Singapore dollars in bilateral trade by 2020" one year ahead of schedule. In the situation that the COVID-19 will have a huge impact on international trade in 2020, and the volume of trade in goods between China and New Zealand will decrease slightly by 1% year on year, the trade in agricultural products will grow against the trend, playing a "ballast stone" role for the stable development of China New Zealand economic and trade.
Third, the varieties of agricultural products newly exported to China are more diversified. In 2021, about 80% of the agricultural products newly exported to China will be livestock products, mainly including milk powder, mutton, beef, etc., accounting for 38%, 13%, and 9% of China's agricultural product imports from New Zealand respectively; The other main imported products are kiwi fruit, apple, cherry and other fruits (6%) and cuttlefish, squid, shrimp and other aquatic products (4%). China's tariff preference for new agricultural products under the China Singapore Free Trade Zone has not only promoted the consolidation and deepening of China Singapore dairy trade and other traditional categories, but also fully released the export potential of new agricultural products with other advantages to China. For example, China's newly imported kiwi fruit (import tariff of 20%) was only about $20 million in the year when the agreement came into force. The tax reduction of this product and the scale of new export to China "went against each other". After the tariff was completely abolished in 2016, the import volume increased to $270 million and expanded to $520 million in 2021. The analysis report released by the New Zealand China Association for the Promotion of Relations in 2020 also pointed out that new products exported to China have become more diversified since 2013.
Fourth, China is the largest source of imports of some new agricultural products. In 2021, China's agricultural products to be exported mainly include aquatic products such as prawns, cuttlefish and squid, vegetables and products such as garlic, mushrooms and tomatoes, and processed foods such as pasta and sugar food. From the data of Singapore, although China has a small share (3% - 4%) in its agricultural products import sources, China is the largest or even the only import source in some agricultural products. For example, 76% of frozen cuttlefish and squid and 92% of fresh or refrigerated garlic in agricultural products newly imported from the world in 2021 will come from China.
2、 China Singapore Free Trade Agreement and "upgraded version"
（1） China Singapore Free Trade Agreement
The governments of China and New Zealand announced the launch of free trade area negotiations in November 2004, and signed the China New Zealand Free Trade Agreement on April 7, 2008, which has been officially implemented since October 1, 2008, covering trade in goods, trade in services, investment and other fields. Among them, the tax reduction list of agricultural products involves 1272 tax items of agricultural products imported from New Zealand by China (including 11 kinds of agricultural products under special safeguard measures) and 1164 tax items of agricultural products imported from China by New Zealand. The agricultural products imported by China from New Zealand enjoy a relatively relaxed transition period. At present, 94.6% of the taxes on agricultural products have been reduced to zero. New Zealand has reduced taxes on China's agricultural products by a large margin and the transition period is short. All import tariffs on agricultural products have been reduced to zero in 2012.
（2） Regional Comprehensive Economic Partnership Agreement (RCEP)
RCEP negotiations were launched in November 2012, and both China and New Zealand are member states. After eight years, the RCEP Agreement was signed in November 2020 and officially implemented on January 1, 2022. Compared with the China Singapore Free Trade Agreement, which was signed early and has a high degree of liberalization, there is still a certain gap between the level of agricultural product opening under RCEP and the bilateral agreement. However, the rules of origin of RCEP are relatively loose, and the value components of the 15 members are allowed to accumulate, which is still of great significance for promoting the development of agricultural trade between China and New Zealand.
（3） The "upgraded version" of China Singapore Free Trade Agreement
In November 2016, the governments of China and New Zealand announced the launch of the "upgraded version" negotiation of the Free Trade Zone. The negotiation ended on November 4, 2019. The Protocol on Upgrading the China Singapore Free Trade Agreement was signed on January 26, 2021, and will be formally implemented from April 7, 2022. The "upgraded version" of the China Singapore Free Trade Agreement has not made a breakthrough in the opening up of trade in agricultural products and goods, but has continuously upgraded in investment and service trade, rules of origin, e-commerce and other fields, further promoting the institutional opening of bilateral relations.
First, in terms of trade in goods, there are no new concessions for agricultural products. Under the China New Zealand Free Trade Agreement, trade in goods between China and New Zealand has achieved a high level of liberalization, reaching 97.2% and 100% tariff free levels respectively. Therefore, both parties have no new concessions for agricultural products under the "upgraded version". In addition, China will gradually eliminate tariffs on 12 tax items of wood and paper products imported from New Zealand within 10 years. After the relevant tax reduction commitments are fully implemented, 99% of New Zealand's wood and paper products exported to China (about US $2 billion) will enjoy zero tariff treatment.
Second, in terms of investment, New Zealand has greatly relaxed the threshold for review. At present, China is New Zealand's second largest investor. Under the "upgraded version", New Zealand will give Chinese investors the same threshold treatment as CPTPP members, and exempt Chinese non-governmental investment below S $200 million (about US $120 million) from review. China's agricultural investment in New Zealand will be more free and convenient.
Third, in terms of trade facilitation, the terms are more conducive to post border rule cooperation. With regard to the rules of origin, the "upgraded version" further improved the direct transportation terms, introduced the system of independent declaration of origin of approved exporters, and added terms such as reissue of certificates of origin, exemption from submitting documents of origin, and online verification system. With regard to customs procedures, it is required to release perishable goods within 6 hours as much as possible. With regard to e-commerce, electronic authentication and digital certificates, online consumer protection, online data protection, paperless trade and other contents will be included.
Fourth, in terms of service trade, the markets of both sides will be further opened. China has added market access to 22 service areas and further opened up aviation, construction, maritime transport, finance and other service areas. New Zealand has improved the opening level of legal services, engineering services and other fields, and added a new commitment to the full opening of management consulting and all related services.
3、 Opportunities and challenges to China's agricultural trade development
Since the signing of the China New Zealand Free Trade Agreement, bilateral agricultural trade has grown rapidly. China has been the largest agricultural trade partner of New Zealand for 10 consecutive years, and New Zealand has also become the sixth largest agricultural trade partner of China. The "upgraded version" superimposed on the effective implementation of RCEP will significantly enhance the level of bilateral trade and investment liberalization and facilitation, and create new opportunities for the development of agricultural trade. First, cross-border e-commerce has potential. At present, the spread of the COVID-19 has opened an opportunity for the transformation of international trade to digital. Digital trade and cross-border e-commerce have become important ways to connect economic and trade exchanges between countries and regions. Under the "upgraded version" of RCEP and the Free Trade Zone, China and New Zealand will further strengthen openness and cooperation in e-commerce and other fields. In 2022, the New Zealand government's latest budget will arrange 2 million New Zealand dollars to help its cross-border e-commerce enterprises develop. At the same time, it will also launch the Southern link Southern Hemisphere link Plan, aiming to build New Zealand into an e-commerce hub in the Asia Pacific and South America regions. Driven by the new trade patterns and models, the cross-border e-commerce of agricultural products of the two countries has a huge space for development. Second, there are opportunities for the development of agricultural service trade. New Zealand's agricultural service trade focuses on subdividing fields, focusing on local advantageous industries, and exporting advantageous brand value through monopoly multinational enterprises with highly specialized agricultural technology solutions. In addition, the digitalization of New Zealand's industry accounts for about 80%, focusing on the digitalization empowerment of agriculture and animal husbandry. Although the agricultural science and technology industry in New Zealand is small at present, the government encourages the development of agricultural science and technology industry and expands exports, and is implementing relevant development plans. Promoting cooperation in the field of agricultural service trade between China and New Zealand will explore a new path for the two countries to deepen economic and trade cooperation.
At the same time, under the "upgraded version" of the China Singapore Free Trade Zone, China's agricultural trade development will face challenges. First, we should guard against the imminent expiration of the special protection measures for dairy products of China and Singapore, which will impact the development of China's dairy industry. New Zealand has unique natural conditions for the development of animal husbandry, and has a good cow population structure and a sound social service system. Its dairy exports have a strong price advantage. The development foundation and competitiveness of dairy industry between China and New Zealand are very different. According to the China New Zealand Free Trade Agreement, China's special safeguard measures for new butter, cheese and fresh milk will expire at the end of 2022, and the milk powder will expire in 2024. At that time, all dairy imports from New Zealand will be subject to zero tariff. Among them, milk powder is the product with the highest amount and the largest quantity in China's imports of new dairy products, and the impact is the largest after the cancellation of special safeguard measures. According to the estimation of relevant domestic departments, every 100000 tons of imported milk powder equals to the reduction of 850000 tons of domestic fresh milk purchases, which affects the employment of more than 30000 people. A large number of zero tariff dairy imports will restrain and suppress the domestic dairy industry and domestic prices, making the development of China's dairy industry face major challenges. Second, the potential of China's agricultural products for new exports needs to be further explored. China's imports of new agricultural products are the main source of bilateral trade growth. The growth of exports to new agricultural products is slow, and the trade deficit is growing. In 2021, the adverse balance of agricultural products will be 11.07 billion US dollars, an increase of 26.6% year on year. China only ranks fourth among the sources of agricultural products imported from New Zealand, 17.6% less than Indonesia, which ranks third; The import of agricultural products from China accounted for only 5% of the total import of new agricultural products. At present, China's agricultural products, such as fruits, vegetables and tea, account for a relatively low proportion in the New Zealand market, and there are few well-known brands. It is necessary to further promote the quality and efficiency of domestic agricultural products, improve export promotion and marketing efforts, and support the new export of featured and advantageous products.
4、 Policy recommendations
（1） Deepen the New Zealand market and improve the utilization rate of the free trade zone.
China's agricultural products enjoy duty-free treatment when entering the New Zealand market, but China's agricultural products export enterprises need to actively adapt to the strong technical barriers in New Zealand. Agricultural foreign trade enterprises are encouraged to conduct in-depth research on the new domestic market, accurately grasp their consumer demand and technical standards, and carry out targeted promotion of agricultural products. Pay attention to the marketing methods of Chinese agricultural products in New Zealand, enhance the awareness of agricultural product packaging and advertising, and meet the diversified needs of consumer groups. We will vigorously promote the preferential policies of the China Singapore Free Trade Zone and help Chinese enterprises better understand and make full use of the dividends of the agreement.
（2） We will improve the quality and efficiency of the agricultural industry and increase the added value of China's agricultural products.
We will help agricultural business entities to introduce new varieties, new equipment, and new technologies, and strengthen the certification management and post certification supervision of "three products and one standard" agricultural products. We will steadily promote the construction of high-quality development bases for international agricultural trade, and cultivate and build backbone agricultural foreign trade forces with high industrial concentration, high production standards, high export added value, and high brand recognition.
（3） Establish and improve the early-warning mechanism for industrial damage to ensure the safety of domestic industries.
Timely follow up the changes in the agricultural industry in the China Singapore Free Trade Zone, establish and improve the early warning platform for industrial damage, and timely and effectively introduce early warning emergency plans and response measures. For key products such as milk powder and beef and mutton, we will subdivide the products, measure the damage in a timely manner, determine a reasonable trigger quantity according to the trend of supply and demand and price changes, effectively grasp the time and pace of import, and protect the healthy development of relevant domestic industries.
（4） We will foster new forms and models of trade and promote the integration of trade and investment between China and Singapore.
Fully grasp the "upgraded version" and RCEP opening commitment, encourage agricultural product export enterprises to take the opportunity of the cross-border e-commerce comprehensive pilot zone to develop new cross-border e-commerce models, and support cross-border e-commerce enterprises to build overseas warehouses in the New Zealand market. We will strengthen the export of agricultural products and promote public services. Focusing on the export of superior agricultural products such as grain products, pigs, drinks, fresh fruits and vegetables from New Zealand, we will actively apply new technologies such as 5G, big data, cloud computing, and the Internet of Things to build an online offline (300959) integrated omni channel agricultural product supply chain.
(Author's unit: Agricultural Trade Promotion Center of the Ministry of Agriculture and Rural Affairs)
Table 2 List of Free Trade Agreements that New Zealand has signed and is negotiating