The development of a free trade agreement between China and New Zealand: From the perspective of the New Zealand wool industry

New Zealand was the first nation to recognize China as a market economy under WTO rules and began negotiations for a Free Trade Agreement (FTA) with China in 2004. New Zealand also aims to be the first country to conclude a free trade deal with China. This study will assess recent developments in Chinese-New Zealand trade and identify the potential impact on the New Zealand economy of adopting a FTA with China. In this study, the wool industry is utilised to illustrate this potential. Merv Stark, New Zealand Trade and Enterprises (NZTE) senior trade commissioner (North Asia) asserted that: New Zealand could never be completely ready for a FTA with China. But we must be as prepared as we possibly can. Once the agreement is settled, there is only a short window of opportunity where New Zealand has an advantage over the rest of the world. We must hit the ground running when the market opens, not be chasing opportunities after they have already gone. (Stark, 2005, p.1) Therefore, it is essential for us to take the opportunity access affluent markets, increase market share, and to plant the seed of a closer trading relationship which indicates a promising future (Stark, 2005). The potential FTA is even more crucial for the New Zealand wool industry, as China is its largest export destination and also presents an ever-increasing business opportunity. The New Zealand wool industry is well-established with a long history, and to a great extent, has traditionally been the backbone of the New Zealand economy. It also has a leading reputation for research and innovation, development facilities and personnel in the wool and fibre industries in an international context. It has made substantial achievements in niche markets such as active outdoor wear and high-value fashion clothing. It has also established a relative foothold of reputation and market share in some aspects of the Chinese market. To integrate these strengths, along with the opportunities brought by the free trade deal, it is essential for the wool industry to adopt feasible strategies to open/obtain market shares in China, and increase its competitiveness with respect to other producers