Tue, Mar 19, 2002 - Page 17 News List

New Zealand, HK deal hits snag

RULES OF ORIGIN Prime Minister Helen Clark said that the formation of a free trade agreement may harm her country if the original location of imports was unknown

REUTERS , WELLINGTON

A planned free-trade deal between New Zealand and Hong Kong is stuck on the issue of where goods made by Hong Kong firms are finally assembled, the New Zealand government said yesterday.

Prime Minister Helen Clark said the Hong Kong government had been told that New Zealand cannot agree to rules of origin in the proposed Closer Economic Partnership, under negotiation since last July.

New Zealand insists that the agreement -- which would be its third free-trade accord and Hong Kong's first -- specifies that goods freely traded must be assembled in Hong Kong and not across the border in China. Alternatively, the goods could be assembled in New Zealand. Clark said Trade Negotiations Minister Jim Sutton had made this point clearly in a meeting on Friday with his opposite, Hong Kong Trade Secretary Brian Chau.

"Hong Kong needed to hear it from the minister himself that it was a fundamental issue for New Zealand," Clark told reporters.

"Now that they have heard it from the minister as distinct from officials, they will know that they were reaching below New Zealand's bottom line."

In 2000, the South Pacific country of four million people signed a free-trade agreement with Singapore, the first since a pact with Australia in the early 1980s, and is wooing Chile before seeking deals with other Asian countries such as South Korea and Thailand.

New Zealand wants assurances that China-based makers of textiles, clothing and footwear -- on which a tariff of up to 19 percent is imposed in New Zealand -- won't take improper advantage of Hong Kong tariff removal.

Imports of low-cost shoes and clothes from Asia, and China in particular, were blamed for putting New Zealand textile manufacturers out of business in the 1980s and 1990s. Sutton said he believed agreement on other parts of the proposed accord were achievable, as long as rules of origin could be resolved.

"Mr. Chau clearly understands New Zealand's position and will be consulting with his industry that wish to have some minor finishing processes carried out in a third country," Sutton said in a statement.

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