Impact of Free Trade Agreement on Economic Growth of Partner Countries: China and New Zealand

Abstract

China and New Zealand would be commencing negotiations on a closer economic partnership (CEP) agreement. Both party believe that a CEP agreement would increase bilateral trade flows and generate new employment opportunities through export lead growth in their economy. The benefits of a CEP agreement with China are likely to outweigh the costs, especially` in the longer term. In 1987, Chinese export amount increase from US$9.75 billion US$ to US$339.437 billion; and import amount from US$2.064 billion to US$8.265 billion (Statistic China, 1996). Also, from the quality of trade, even China still has large gap with the top ten countries of international trade, but this gap already starts to be smaller compare to what China had prior to reform and opening the free trade agreement between New Zealand and China came into force in 2008. After the free trade agreement China and New Zealand, China’s government has decreased tariff rate on agriculture product. From free trade agreement, whether New Zealand gain more business opportunities or not depends on tourism, agriculture, and different forestry industries. Therefore, China has highest population created potential markets. In the meantime, China also exports electronic goods, footwear, clothing and computer to New Zealand because New Zealand is short of these industries. This paper examines the impact of Free Trade Agreement (FTA) between New Zealand and China. Key words: Free trade agreement; China; New Zealand; Tariff