New Zealand looks to the UK and the EU to diversify the market beyond China

New Zealand intends to reach free trade agreements with the UK and the EU this year to try to diversify its export markets amid growing tensions with China, the Pacific nation’s trade minister has said.

But Damien O’Connor insisted that Wellington would continue to expand its trade relationship with Beijing despite the “cuts” that tighten ties between its neighbor Australia and China.

“Any country engaged in trade sees the value of having market diversity, particularly in a world that is increasingly challenged by disruption, climate events, geopolitical events or whatever,” he told the Financial Times.

“It is clear that China is also an important market for Australia. And, although we are concerned about some of the reductions that are taking place, we are only moving forward and building the zones of strength between our two nations.

China is New Zealand’s largest trading partner and accounts for US $ 19 billion (US $ 13.5 billion) in exports during the year to the end of March, a quarter of its total exports.

Wellington has managed to avoid the diplomatic disputes that exist destroyed Sino-Australian relations for more than a year, prompting Beijing to apply punitive tariffs on Australian wine and barley imports.

“We have always been direct about our relationship [with China], which has been incredibly valuable, ”O’Connor said when asked how New Zealand had avoided that fate.

Wellington was the first developed country to sign a free trade agreement with China in 2008 and in January agreed to update the pact to expand market access.

However, Wellington has quietly intensified efforts to diversify its trade relations to reduce China’s dependence.

As part of that process, O’Connor will meet in London on Thursday with UK Trade Secretary Liz Truss to speed up negotiations on a free trade agreement with the UK. He will later travel to Brussels to discuss an EU agreement.

Truss has been set in New Zealand as the next target of a major post-Brexit trade deal. An official from the International Trade Department described the talks as “the next big game in town”.

But UK officials warned that progress would depend on O’Connor’s meeting with Truss. “New Zealanders will have to give us more information on investment, mobility and services if they want an agreement. So far they have been slow to move forward on these issues, “a senior Whitehall official said.

O’Connor said a New Zealand-UK deal would likely be similar to the United Kingdom-Australia trade agreement, which was agreed in principle this week. Tariff cuts in New Zealand farm exports, including dairy, lamb and beef, would be one of Wellington’s demands, he said.

He added that British farmers should not be afraid Imports from New Zealand. Most of its agricultural products were destined for Asia, the United States and other markets, while the volume available for the United Kingdom and the EU was small. However, New Zealand products could play a role in meeting off-season demand, he said.

Analysts said Wellington’s efforts to diversify its trading partners could help protect its economy in the event of a broken relationship with Beijing, even if there are few economic reasons to do so at present.

“Diversification is always a matter of protecting yourself from risk,” said Rob Scollay, an associate professor at the University of Auckland. “But I’m not sure. If there isn’t some kind of political collapse, there’s some solid reason to diversify from China.”

New Zealand has been criticized by Australian politicians, analysts and the media for what they consider to be theirs welcoming relationship with Beijing, accused of trampling on human rights in Hong Kong and Xinjiang.

Wellington has been reluctant to extend the mandate of the Five Eyes intelligence alliance, a network that includes Australia, the United Kingdom, Canada and the United States.

Last month, 60 minutes issue a documentary titled Dollars versus decency: China seizes New Zealand? who criticized O’Connor for saying that Australia needed to “follow us and show respect” to Beijing.

“Probably in hindsight I shouldn’t have said that,” O’Connor said, adding that he maintained a positive relationship with his Australian counterpart.

He also denied that Wellington had passed through China. “We talk when needed and continue to create business opportunities where there is value for both the supplier and the customer.”