WORLD TRADE  
ORGANIZATION  WT/REG266/2 
25 November 2010 
 (10-6353) 
Committee on Regional Trade Agreements 
 Original:   English 
 
 
 
FREE TRADE AGREEMENT BETWEEN CHINA AND NEW ZEALAND  
 
Questions and Replies 
 
 
 The following communication, dated 24 November 2010, is being circulated at the request of 
the delegations of China and New Zealand.   This document reproduces the questions addressed to the Parties and the responses submitted. 
 
_______________ 
 
 
Questions from the Delegation of Brazil
 
 
1. The Chapter on SPS of the Free Trad e Agreement (FTA) between China and 
New Zealand encourages - but does not require – th e realization of risk analysis process and the 
recognition of the principle of regionalization.  With respect to regionalization, although 
Article 6.2 of the WTO Agreement on SPS uses the language "shall recognize the ... concepts ...", the Factual Presentation of the Agreement makes use of the term "may 
recognize", in paragraph 36.  Brazil would like to know the conditions under which such 
recognition may take place. 
 Article 80 of the FTA (Adaptation to Regi onal Conditions) states that 'where a Party 
objectively demonstrates an area or part of its territory  to be free of a pest or disease or an area to be 
of low pest prevalence, following an assessment by th e other Party, the Parties may agree to recognize 
this status'.  The intent of that Article is to  encourage Parties to recognize pest-free status for a 
particular region, but not to require them to.  The conditions for such recognition to take place will 
differ for different products.  
2. Also in the Chapter on SPS, the text stat es that the principles and criteria for the 
recognition of disease-free areas will be develope d by the Parties, without mentioning neither 
current standards established by reference organizations (OIE, IPPC), nor Article 6.1 the 
WTO Agreement on SPS, which already prov ides some criteria for recognition of the 
regionalization principle.  Brazil would like further clarification on how the processes of recognition that will be developed under the regional agreement are connected to those 
prescribed in Article 6.1 of the WTO Agreement on SPS. 
 At present, the Parties focus on excha nges on regulatory practices and experiences on 
regionalization.  The Parties held a joint seminar on the SPS concepts of regionalization and equivalence in 2010 and discussed guidance from re levant international standard-setting bodies.  
   WT/REG266/2 
Page 2  
 
   Article 76 of the FTA states that 'nothing in the SPS Chapter or Implementing Arrangements 
shall limit the rights of obligations of the Parties pursuant to the (WTO) SPS Agreement'.  The intention of the joint principles, criteria and pr ocesses for recognition of pest or disease-free areas or 
areas of low pest or disease prevalence is to give prac tical effect in a bilateral context to the standards, 
guidelines and recommendations developed by the international standards setting bodies (i.e. the 
World Organisation for Animal Health (OIE) and under the framework of the International Plant 
Protection Convention (IPPC)) recognized in Annex A of the WTO SPS Agreement.  The principles, 
criteria and processes have not yet been completed but once they are, they will be recorded in 
Implementing Arrangement 7C(1).   3. The FTA between China and New Zealand contains specific provisions on verification 
(Article 82) and import checks (Article 84).  Although these Articles seem to be in line with the procedures described in the Annex C of the WTO Agreement on SPS, such issues go beyond the WTO Agreement on SPS.  Could the Parties clar ify the connection between Articles 82 and 84 
of the FTA and the Annex C of the WTO Agreement on SPS? 
 As above, nothing in the SPS chapter of the FTA limits the rights or obligations of the Parties 
pursuant to the WTO SPS Agreement. Furthermore, Article 74(1) states that an objective of the 
SPS Chapter of the FTA is to 'uphold and e nhance implementation of the SPS Agreement and 
applicable international standards, guidelines  and recommendations developed by relevant 
international organizations'.  Therefore the conn ection between Articles 82 and 84 of the FTA and the 
SPS Agreement is that the former provides a mechan ism for enhancing the Parties' implementation of 
the latter.  
 
Question from the Delegation of Chile
 
 4. We have noted from page 37 of the Report that alongside the New Zealand-China FTA, 
the Parties have signed an Environment Cooperation Agreement. 
 We would appreciate if representatives fr om China and the New Zealand Delegations 
could tell us, in general terms, which topics rel ated to trade and environment cooperation are 
being developed under the framework of the Environment Cooperation Agreement.  
 The ECA is a separate Agreement to the FTA.  For more information please see the Parties' 
websites. 
 
Questions from the Delegation of the European Union
 
 Merchandise Trade
 
 
5. Given the fact that this Agreement has been  already for more than two years in force, 
since 1 October 2008, could the Parties indicate  how much bilateral trade flows have been 
impacted since?  Could the Parties indicate  whether there has been any noticeable trade 
diversion effect? 
 No response provided. 
 
Trade in Services and Investment  
 6. In paragraph 11, it is reported that "[f]or reasons of confidentiality, only data for 2005 
are available for inward investment".  Therefore,  data for inward investment in New Zealand 
for the years 2006, 2007 and 2008 have not been provided.   WT/REG266/2 
 Page 3 
 
 
   Could New Zealand give some details regardi ng the potential problems of facilitating 
this information?  
 No response provided. 
 Background information
 
 7. Paragraph 14 indicates that the Agreement is  composed of 18 Chapters. One of these 
Chapters relates to Cooperation. In particular, Ar ticle 177 of the Cooperation Chapter refers to 
the Memorandum of Understanding on Labo ur Cooperation and the Environmental 
Cooperation Agreement that the Parties have concluded together with the FTA 
(http://chinafta.govt.nz/1-The-agreement/1-Key-outcomes/index.php
).  
(a) Could the Parties elaborate on this, and whether any particular cooperation 
activities have been set up under this header yet?  
(b) Could the Parties or the WTO Secretariat also explain why the binding 
Memorandum of Understanding on La bour Cooperation and the binding 
Environment Cooperation Agreement has not been included in Box II.1? 
 No responses provided. 
 
Liberalization of trade and tariff lines  
 
8. The Factual Presentation indicates that by the end of the implementation, in 2019, 
China would have liberalized 97.1% of the tariff lines representing 88% of imports in value, while New Zealand would have granted a full 100% liberalization already by 2016.  
(a) Could China elaborate on the reasons for these asymmetric commitments, 
especially in light of the fact that New Zealand is only China's 52
nd import 
partner, representing less than 0.2% of China's imports? 
(b) Could China elaborate in particular on the reasons for not having liberalized 
118 tariff lines in Chapter X (pulp and paper)?  
 No responses provided. 
 
Sanitary and phytosanitary measures  
 
9. As noted in paragraph 37, and pursuant to Article 81.3, New Zealand and China agreed 
to recognize each other's sanita ry and phytosanitary (SPS) meas ures on goods if the exporting 
party objectively demonstrates that its measu res reaches the importing party's standards.  
(a) Considering the increasing volume of th e imports from China, how will New 
Zealand assure it will continue to maintain its high SPS standards, especially 
given the EU's SPS Agreement with New Zealand? 
(b) We note that a Joint Management Co mmittee has been established already 
under the FTA.  What is the priority  order for considering market access 
requests from each Party? 
(c) Is New Zealand considering or has it considered a request to recognize the 
equivalence of Chinese SPS measures for any specific products yet? WT/REG266/2 
Page 4  
 
  (d) Have there been any discussions to est ablish a Sanitary/Veterinary Agreement 
between the Parties? 
 No responses provided. 
 
10. In paragraph 38, it is reported that the Part ies shall have the right to audit and verify 
the procedures of the exporting Party.  Furth ermore, "the Parties may share the results and 
conclusions of the audit and verification  procedures and checks with non-Parties." 
 Could the Parties confirm whether they h ave already undertaken SPS verification 
missions?  If so, has either Part y already shared the results with  non-Parties, for instance by 
posting mission reports on the internet? 
  No response provided. 
 
Technical Barriers to Trade
 
11. According to Article 97.5, and as reported in  paragraph 44, each Party shall accredit or 
otherwise recognize conformity assessment bodies in the territory of the other Party on terms 
no less favourable than those it accords to conformity assessment bo dies in its territory. 
 Have either Party already recognized any conf ormity assessment bodies in the territory 
of the other Party? 
 
 No response provided. 
 
12. As reported in paragraph 45, the Parties can request technical consultations on the 
application of any technical regulation or the recognition of any standard or conformity 
assessment procedure. 
 Have any consultations occurred on the application of any technical regulation or 
recognition of any standard or conformity as sessment procedure occurred? If so, could the 
Parties provide the relevant details?   
 No response provided. 
 
13. Paragraph 46 notes that pursuant to Article 100, the TBT Chapter provides for the 
establishment of a Joint Committee, inter alia , to set up working groups to consider issues 
relating to:  WTO enquiry and notification poin ts;  standardization;  and accreditation and 
conformity assessment; and to identify priori ty sectors for enhanced cooperation, including 
giving favourable consideration to any sector -specific proposal made by a Party.  
 Has the Joint Committee met yet and set up any TBT-related working groups?  If so, 
could the Parties please elaborate? 
 
 No response provided. 
 
Safeguard mechanisms
 
 
14. The Agreement sets up specific safeguard me asures for each Party, such as the 
possibility to exclude each others' products from  global safeguard meas ures providing they are 
non-injurious.  Bilateral safeguards have also been planned, but are only provisory and subject  WT/REG266/2 
 Page 5 
 
 
  to compensation.  Furthermore, the Agreement contains special safeguards for China on 
imports of dairy products from New Zealand in the form of a higher tariff.  
(a) Has a Party excluded the other's product(s ) from global safeguard measures and 
if so, how was the exemption defined as "non injurious"?  If so, please elaborate on the details.  
(b) Have any bilateral safeguards been applied or under consideration?  Was any 
compensation provided?  If so, please elaborate on the details.  
(c) Has the volume of the 11 dairy tariff lines from New Zealand ever exceeded the 
quantity-based trigger level and if so, has New Zealand received any compensation for the application of a sp ecial safeguard on its imports of dairy 
products to China?  
 No responses provided. 
  
National Treatment in investment
 
 
15. We note that pursuant to the provision agreed in the framework of the FTA, 
New Zealand agreed to accord national trea tment to Chinese investments. However, recent 
developments in New Zealand, notably in the co ntext of the New Zealand's Overseas Investment 
Review, point to a likely trend towards increased restrictions on foreign direct investment.  
 Could New Zealand explain to what degree these trends are consistent with the good 
functioning of the FTA?  
  No response provided. 
 
Movement of natural persons
 
 
16. The Agreement improves movement of natu ral persons in two domains: temporary 
entry of natural persons and temporary employm ent of natural persons. Only New Zealand has 
committed itself to improve the latter. Althou gh temporary employment entry shall not be 
denied on the basis of the labour market a nd economic situation of the country, New Zealand 
has set up strict numerical restrictions on the entrance of Chinese workers.  
 Are the Parties intending to liberalize further the entry requirements for the movement 
of natural persons? 
 
 No response provided. 
 
Liberalization commitments in trade in services  
 
17. China's schedule of commitments for services in the FTA with New Zealand contains 
references in 28 sectors to limitations under Mode 3 which will be removed within a certain time 
span from "Chinese accession".  
 Assuming that this is a copy of the Ch inese WTO commitments schedule, could China 
explain why these have not been removed sin ce the Agreement with New Zealand was agreed 
after these limitations had already lapsed? 
 
 No response provided. WT/REG266/2 
Page 6  
 
  18. Overall the Chinese commitments for serv ices only cover new or improved 
commitments in seven services sectors/sub-sector s. In particular, there are only new/improved 
commitments for Mode 1 in two subsectors:  Project management services other than for 
construction (CPC 86601) and for maintenan ce and repair services of motor vehicles 
(CPC 61120).  Overall this presents a picture of limited sectoral coverage understood in terms of 
number of sectors, volume of trade affected and modes of supply covered.  
 Could China explain how this limited num ber of new/improved commitments is in 
accordance with the conditions established in Article V GATS on economic integration? 
 
 No response provided. 
 
Exceptions
 
 19. According to Article 202.1, and as reported in paragraph 112, the Parties can take 
measures for balance-of-payments purposes for:  trade in goods in accordance with GATT 1994 
and the WTO Understanding on the Balance-of-P ayments of GATT 1994;  trade in services in 
accordance with GATS;  and investments. 
 Has there been an understanding between the Parties on a maximum time period for 
'temporary' balance of payment safeguard measures? 
 
 No response provided. 
 
Intellectual property rights
 
 20. In paragraph 125, it is indicated that notifi cations on new intellectual property laws and 
information exchanges regarding developments  in intellectual property policy shall be 
channelled through the Parties' contact points.  Through the contact points, the Parties may 
request consultations on any issues within the sco pe of the Chapter to the other Party although 
a Party may deny the request, pursuant to Articles 166.1, 166.2 and 166.5.  Once initiated, if a 
Party considers that the consultation fails to resolve the issue, it may invoke Chapter 16 on dispute settlement after notification to the other Party of the decision. 
 Could the Parties provide more details regardi ng the application of this mechanism?  
 
 No response provided. 
 Cooperation
 
 21. As indicated in paragraphs 127 and 128, the Agreement explores ways of tightening 
links between China and New Zealand, throug h cooperation on small and medium-sized 
enterprises and the implementation of a Doctoral Research Scholarships Programme.  
 What initiatives will the parties take to reinforce the cooperation of their small and 
medium-sized enterprises?  
 No response provided. 
 
 
    WT/REG266/2 
 Page 7 
 
 
  Questions from the Delegation of Japan  
 22. With regard to the provision of sub-paragr aph 1 of paragraph 3 of Annex 10, does 
China recognize New Zealand's licenses or examinatio ns to be qualified as doctors, dentists and 
any other medical professionals?  Are there any requirements or limitations for New Zealand 
doctors to provide medical services in China such as Chinese proficiency, limitation on 
nationality of patients, service consumers, limit ation on places where those doctors can provide 
services, or employment contracts? 
 The foreign medical practitioner needs to be a pproved by the Health Authority of China by 
submitting certain demonstration documents as a qualif ied doctor.  A license is required for providing 
temporary medical services in China. Details can  be found in "Interim Administrative Measures for 
Foreign Doctors Temporarily Practicing Medicine in China". (www.moh.gov.cn)  
23. Regarding Annex 11, are there any other requirements or limitations for Chinese 
Traditional Medical Practitioners including nurses to provide services in New Zealand such as 
English proficiency, limitation on nationality of  service consumers, or limitation on places 
where those practitioners can provide services? 
 Under Annex 11, up to 200 qualified Chinese Traditional Medical Practitioners 
(including nurses) can be granted non-labour ma rket tested New Zealand work visas for up to 
three years, provided: 
 
• they have a job offer from a New Zeal and employer (which meets New Zealand 
employment laws and market rates of pay);  and 
• they have a higher education degree requirin g at least three years' successful study in 
Traditional Chinese Medicine from an institution recognized by the Chinese government;  and  
• they meet standard health and character requirements. 
 There are no requirements relating to English language proficiency fo r Traditional Medicine 
Practitioners under Annex 11.  Practitioners may supply services to consumers of any nationality 
while in New Zealand, and there are no restrictions on places of employment where those 
practitioners can provide services in New Zealand.  
Questions from the Delegation of Pakistan
 
 24. In China's tariff liberalization scheduled, 223 tariff lines will remain dutiable at the end 
of implementation period.  Could China expl ain reasons for maintaining a high tariff on 
vegetables products, prepared foods etc., chem icals and chemical products and textile and 
textiles articles? 
 According to the Agreement, within 12 years af ter the effectiveness of the agreement, 97.2% 
of the goods imported from New Zealand to China w ill enjoy zero tariff, among which, the tariff for 
96.7% of the goods imported from New Zealand will be eliminated within six years.  In order to 
protect the domestic industrial security, the Agreem ent excluded 214 tariff lines from tariff reduction, 
including the tariff-related-quota products, such as wh eat, corm, rice, sugar, cotton, fertilizers;  some 
tariff lines related with eatable oils, and wood-paper products. In addition to that, China set up 
country-specific-quota for 9 tariff lines of wool and wool-tops for New Zealand.  WT/REG266/2 
Page 8  
 
  25. The Secretariat Report states that a new feature compared to the WTO agreement on 
TBT is that each party shall give positive consideration to accepting as equivalent the other Party’s technical regulations, if they produce ou tcomes that are equivalent to those produced by 
its own technical regulations in meeting its legiti mate objectives and achieving the same level of 
protection.  Could the Parties explain their experi ence with regard to this new feature, and also 
what is meant by legitimate objectives and achieving the same level of protection? 
 Article 95 of the FTA captures Article 2.7 of the WTO TBT Agreement in terms of an 
obligation to give positi ve consideration to accepting as equiva lent technical regulations of the 
other Party.  It also includes the concept that such  regulations should meet the legitimate objectives of 
the other Party in the context of risk management, in line with Article 2.2 of the WTO TBT 
Agreement. 
  The new feature embodied in Article 95 is the establishment of an obligation on a Party to explain its reasons for not accepting the technical re gulation of the other party as equivalent.  This 
goes to the heart of transparency of decision-ma king and supports open and collaborative discussions 
on equivalence of technical regulations. 
 
 Neither Party has made specific requests for the recognition of equivalence of technical 
regulations to date.  
26. The Secretariat Report states that a Joint Working Group (JWG) is to be established 
regarding vocational qualifications, and that a meeting was held in November 2009 to discuss 
the establishment process and terms of referenc es for the JWG on vocational qualifications.  
Could the parties share information regarding the latest progress on establishment of JWG and 
progress with regard to working out vocational qualifications? 
 As mandated in Article 113.2, the New Zealand Qualifications Authority and the Ministry of 
Human Resources and Social Security (previously name d Ministry of Labour and Social Security) of 
China have established a Joint Working Group to  advance mutual recognition of vocational 
qualifications. The Ministry of Human Res ources and Social Security and New Zealand 
Qualifications Authority first met in New Zeala nd in November 2009 to discuss the establishment of 
the JWG and NZQA tabled the Terms of Referen ce.  At a second meeting in Beijing in April 2010 
both Parties exchanged detailed information on each ot hers' qualifications systems, with a view to 
identifying specific qualifications from each Party to  be considered for formal recognition by the 
other Party.  The Terms of Reference for the ob jectives and operation of the JWG were agreed in 
November 2010.  
27. Alongside the FTA, New Zealand and China signed a MoU on Labour Cooperation.  
Could the Parties share features of the MoU and implementation outcomes thereof? 
 The MoU on Labour Cooperation is a separate Ag reement to the FTA.  For more information 
please see the Parties' websites. 
 
Questions from the Delegation of the United States
 
 
Services and Investment  
 
28. Paragraph 104 of the Secretariat’s Report no tes that the Parties to the Agreement have 
agreed to encourage relevant authorities to expl ore possibilities for recognition of qualifications 
and professional and vocational licenses.  WT/REG266/2 
 Page 9 
 
 
   Could the Parties describe the nature of their "encouragement" to relevant 
New Zealand and Chinese authorities (pursuant to Article 113.3 of the Agreement);  the types of strengthened cooperation that have resulted from such encouragement; and the outcomes of 
such strengthened cooperation in terms of recognition of qualifications and professional and vocational licenses? 
 No response provided. 
 
29. Paragraph 69 of the Secretariat’s Report notes that, pursuant to 124 of the Agreement, 
the Parties shall consult within two years of  entry into force of the Agreement to review 
implementation of the services Chapter and cons ider other issues of mutual interests, with a 
view to the progressive liberalization of bilatera l trade in services.  Paragraph 69 also describes 
the cooperative arrangemen ts between the Parties pursuant to Article 122. 
(a) With respect to Article 124, can the Pa rties describe the outcome of their 
(presumably recent) consultations, in particular with respect to the extension of most-favoured-nation treatment to additional sectors not listed in Annex 9, and 
with respect to progressive liberalization of trade in services between them?  
(b) With respect to Article 122, can the Part ies describe how they have sought to 
implement the obligation upon them to "strengthen cooperation efforts in services sectors"? 
 No responses provided. 
__________