A trade agreement with China would benefit food and beverage companies in both countries, New Zealand's deputy prime minister Michael Cullen said yesterday.
Speaking at the China Executive Leadership Academy Pudong (CELAP) in Shanghai, Cullen tried to persuade the Chinese authorities to enter into a trade agreement, arguing that "there are substantial gains at stake for both our economies if we can complete a trade deal."
New Zealand, like many other Western economies, is trying to secure trade deal with Asian countries, fearing a loss of trade if developing nations with booming economies such as China look elsewhere.
Cullen argued that the food industry, in particular, would benefit, as five per cent of New Zealand food and drink exports are sold to China, which in turn provides 13 per cent of New Zealand imports, Cullen said.
"Our exporters benefited when China entered the World Trade Organisation in late 2001 and tariffs on a number of New Zealand products fell," he argued. "We also benefit from increased certainty of access as a result of China becoming part of a rules-based system."
China, on the other hand, has profited from New Zealand's thousand year old farming "heritage"; its farm policy and agricultural methods, he added.
According to the deputy prime minister, a globalised economy has opened the door to innovation and invention in New Zealand's food industry, paving the way for products that the country did not want to or could not manufacture fifty years earlier.
"A generation ago we didn't have a wine industry to speak of; now our sauvignon blancs and pinot noirs are world-leading," he said. "Our dairy companies are inventing high-nutrition sports drinks, while the horticulture sector is developing high value plant varieties like Zespri Gold kiwifruit and Jazz apples."
When pushing for a globalised food industry, Cullen argued that China and New Zealand-based food companies should work together because the two economies are "complementary", and would allow companies from both countries to grow.
As an example of how companies blossom within a free market, Cullen illustrated his speech by describing the expansion of Fonterra, one of New Zealand's, and now the world's, largest dairy company.
"Fonterra comprises a global supply chain that takes milk from its own shareholders' farms in New Zealand - and also from farms in other countries," he said. "The partnership benefits from the local expertise of Fonterra's partners, and those local partners benefit from Fonterra's technological expertise in the dairy field and global marketing experience."
New Zealand manufacturers would profit from China's innovative technology, Cullen suggested.
"Science and technology are crucial to transforming New Zealand's economy to a high-skill, high-value, globally-connected economy," he said.
Innovation is also key for growth, he said, and companies must adapt to different local tastes to do well.
For example, New Zealand meat manufacturers must not only sell legs of lamb to the UK, but also diced lamb in sauce, chilled and vacuum packed, perhaps served with a side-dish, to countries such as China.
According to the New Zealand Herald, there have been 14 rounds of negotiations between the two countries over recent years, and New Zealand Prime Minister Helen Clark has this month once again tried to persuade Chinese President Hu Jintao to enter into an agreement.
Clark told the newspaper that although there were still several issues to be discussed, such as the dairy industry, the ball was firmly in China's court.
"I think that they now need within their system to be thinking of what they want to be in the final deal and how far they can move," she said.
