By the Blouin News Business staff

New Zealand embraces Asia with new deals

by in Asia-Pacific.

n Key (L) shakes hands with South Korea's President Park Geun-Hye (R) prior to their meeting at the presidential Blue House on March 23, 2015 in Seoul, South Korea. Chung Sung-Jun/Getty Images

P.M. John Key and South Korea’s President Park Geun-Hye in Seoul, South Korea, March 23, 2015. Chung Sung-Jun/Getty Images

Monday was a big day for New Zealand’s growing future with Asia. The country signed a free trade agreement (FTA) with South Korea on the occasion of a meeting between New Zealand’s Prime Minister John Key and South Korea’s President Park Geung-hye in Seoul.

Exploratory negotiations on the FTA were launched in June 2009. The leaders of the two countries struck the current deal on the sidelines of the G20 summit held in Australia in November 2014, but it still took a few months to finalize. Now the signed FTA will be subjected to parliamentary ratification in both countries.

Bilateral trade between the two countries in 2014 reached $3.26 billion, and was almost evenly balanced — South Korea exported just slightly more than it imported from New Zealand. But this FTA is more important to New Zealand than it is to South Korea, particularly for the agricultural sector that produces most of New Zealand’s exports. The FTA is seen as a “catch-up agreement,” because New Zealand’s exporters would have been slowly squeezed out as South Korea expands its FTAs beyond the 50 or so that it currently has. New Zealand’s Trade Minister Tim Groser openly admitted that his country’s “key argument” was essentially political, not about trade: “For heaven’s sake, we New Zealand, are supplying under 4% of your agricultural imports. You are already on a path towards free trade in the very long term with the world so why would you discriminate against New Zealand?’” he said. This discrepancy in national importance is also evident by the uneven timeframes of the agreement — New Zealand will remove tariffs on all South Korean products within seven years after the implementation, while South Korea will abolish tariffs on 96.4 % of all products from New Zealand within 15 years after the pact takes effect. Still, the deal is a victory for both sides.

The other main event on Monday was the announcement by Air New Zealand and Air China that they will expand their partnership by beginning a daily Beijing-Auckland direct service as early as December. (They are both members of the Star Alliance of international airlines, and their existing Shanghai-Auckland service will continue.) The new route, which is still subject to regulatory approval, would nearly double the passenger capacity between the two countries, and is accordingly expected to boost mutual tourism and business travel.

The agreement follows a similar partnership between Air New Zealand and Singapore Airlines that was approved in August 2014. Such alliances are crucial to Air New Zealand’s future viability, because (like Australia’s airline Qantas) “it suffers challenges in being an ‘end-point’ carrier in a market increasingly dominated by airlines with intermediate hubs located in Asia or the Arabian Gulf,” according to the Australian Business Traveler.

New Zealand has recognized the importance of Asia for its future, and has succeeded in signing FTAs with China, Malaysia, and ASEAN in the past few years. Others, such as one with India, are currently being negotiated. Things are looking up for New Zealanders.