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NZ / China Free Trade Agreement
Exporting products to a country of 1.3 billion people without having your profits eroded by tariffs is an exciting prospect for any New Zealand business. And thanks to our historic Free Trade Agreement with China, Kiwi exporters can take advantage of that exact scenario from 1 October 2008. Tariffs will be cut in a staged process so that by 2010, 96 per cent of all New Zealand-made goods exported to China will be tariff free.
New Zealand is the first Western nation to secure a free trade pact with China, which is currently our fourth-largest export market and the world's fastest-growing economy. The lucrative deal is estimated to be worth $350 million a year.
But in order for local exporters to benefit from the Free Trade Agreement, they must first obtain a Certificate of Origin to prove their goods are legitimately made here in New Zealand.
Independent Verification Services (IVS) has been given the right to issue these certificates, in recognition of its experience in the certification industry. IVS’ certification manger, David Baker, says Certificates of Origin will also enable exporters to get their products onto the Chinese market quicker than ever before. “Under the FTA, goods that arrive in China with a certificate will be processed within 48 hours by Chinese Customs,” Mr Baker says.
IVS has set up an on-line system which allows Kiwi exporters to have certificates couriered directly to them, providing their products meet one of three criteria.
“To qualify for reduced tariffs under the Free Trade Agreement you have to show your goods ‘originate’ from New Zealand” Mr Baker explains. This can be done in three ways – by showing they are either ‘Wholly Obtained’, ‘Wholly Produced’, or meet what’s known as ‘Product Specific Rules’.
“A good qualifies under the Wholly Obtained criteria if it is made of, or produced from, raw materials which come from New Zealand,” Mr Baker says. “An example would be a log from a tree grown in New Zealand, or a jersey made from New Zealand wool.”
An exported good is deemed to be Wholly Produced if it is made from materials originating from either country - such as fish caught in Chinese territory which is made into fish fillets in New Zealand.
The third criteria – Product Specific Rules – are designed to cover those products which contain some materials that originate elsewhere. While the rule for each product varies, the general guideline is that any non-originating material must be sufficiently processed in New Zealand in order to qualify.
“Under these rules, wheat imported from Australia and processed into flour in New Zealand will qualify for a Certificate of Origin,” Mr Baker says. “But flour imported in bulk from Australia then bagged in New Zealand for sale to China will not.”
In all cases, the final processing/manufacture of the good must happen in New Zealand.
All of this can seem complicated but IVS will be there to help exporters figure out if their goods qualify.
“Our on-line system will take people through it, step by step,” Mr Baker says. “We have developed a comprehensive questionnaire for people to follow to determine if their goods are deemed to ‘originate’ from New Zealand or China.
“There are detailed notes which explain each of the three criteria, and numerous examples given to help you through.”
To get started, exporters simply need to register on-line with IVS and enter information about their goods and, where required, the materials which make up those goods. Any supporting documentation – such as inventory records or valuations - will then need to be uploaded if required, before the certificate request is submitted. Once approved, the certificate will be couriered directly to businesses.
“All goods listed on the certificate are then added to IVS’ master list for each client,” Mr Baker explains. “This means exporters can select from goods already on their list when creating future certificate requests, rather than re-entering the information each time.”
IVS is also offering a nationwide Origin Assurance Program for exporters who will require a large number of certificates. This will involve IVS staff visiting businesses on site once a year to review their processes. “This will reduce the overall cost of applying for Certificates of Origin, plus eliminate the need to provide supporting documents when making on-line applications later on,” Mr Baker says.
Under the Assurance Program, IVS will need to be notified if there is a new or substantial change to any goods being exported after the annual visit. “Depending on how significant that change is, another site visit may be required to ensure the affected goods can still take advantage of our streamlined process.”
Once exporters have registered and their systems are up and running, Mr Baker estimates applying for a Certificate of Origin should only take a few minutes and be a simple, stress-free process. “IVS is here to help exporters take advantage of the huge economic benefits that are now on offer to them. The Free Trade Agreement with China will help a lot of Kiwi businesses expand and thrive both here and overseas.”
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