May 12, 2008

Has The New Zealand – China FTA Made Life To Difficult For Chairman Kevin And Kim Il-Carr?

We are hearing word out of Canberra that people in high places are shocked by aspects of the NZ-China deal. Not only are they amazed that China was prepared to agree to such a broad MFN commitment on investment, MFN language on some services sectors, and such early and comprehensive liberalisation of goods trade. Some in Canberra are doubting that the Rudd-Carr regime are willing to jump on the rapid liberalisation bus. So while short term there is much macho talk about China needing to do better on services (particularly Financial Services) than the deal that was done with New Zealand, the Government is having to make some pretty fundamental political judgements about its ability to liberalise the automobile and TCF sectors in accordance with the China-NZ timetable. What is particularly worrying for Australia’s negotiators is that if Australia continues to ask for more than New Zealand got on services China will be expecting more than New Zealand gave on goods. What New Zealand gave on goods might be too much for Australia. Bottom line? Don’t expect an early conclusion to this negotiation.