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NZ Manufacturers Oppose China FTA

CNBC.com
Sunday, 14 Oct 2007 | 11:22 PM ET

Trade between New Zealand and China is expected to receive a boost next year as both countries are likely to seal the Free Trade Agreement (FTA) by April 2008 at the latest.

Impact of FTA on Firms
The Free Trade Agreement between between New Zealand and China is not helpful to manufacturing business says John Bongard, CEO at Fisher & Paykel. CNBC's Martin Soong reports.

New Zealand estimates exports to China will increase by up to NZ$400 million (US$309 million) a year in what at first glance, may appear to be a boon to the economy. However, top corporate chiefs such as Fisher & Paykel's CEO John Bongard are not supportive of the FTA.

"Frankly that's very unhelpful for our business," Bongard commented on the impact of removing duty protection. "(It) just exposes all manufacturers in New Zealand to compete with low-labour cost countries in the Asian area."

Manufacturers like Fisher & Paykel have also had to grapple with the rising strength of the New Zealand dollar against the Australian dollar.

"We got used to the Aussie-Kiwi cross at around $0.7580 and that's an ideal level of where the dollar in our view should be. But of course its been trading way higher than that, up around almost 95 cents, so that's made it very difficult for us."

The Kiwi was trading at $0.8552 to the Aussie dollar on Monday afternoon.

The Kiwi also touched an 11-week against the U.S. dollar at $0.7787 on the back of data showing New Zealand's Consumer Price Index rose by a smaller-than-expected 0.5% in the third-quarter.