Key cautious on China FTA upgrade timetable

"We are going to work hard on it. I can't guarantee immediate progress," John Key said

Prime Minister John Key is to visit China this month to discuss upgrading the free trade agreement between the two countries that was signed almost eight years ago, but is warning against expecting a swift resolution.

"We are going to work hard on it. I can't guarantee immediate progress," he said of the upgrade that should automatically follow the signing of an FTA between China and Australia, which is understood to have included more favourable terms than New Zealand's deal.

Under the NZ-China FTA's 'most favoured nation' clause, any improved access for another signatory is by rights extended to the other signatories.

Asked whether China acknowledged New Zealand's MFN claim, Key said: "I think so."

He had met with the Chinese ambassador to New Zealand today and Trade Minister Todd McClay was travelling to China in advance of Key's meetings, which will include audiences with the president, Xi Jinping and premier Li Keqiang.

Other major issues on the agenda included China's desire for an extradition treaty with New Zealand to allow it repatriate Chinese citizens thought to have migrated to New Zealand with illegally obtained wealth. Aid, defence cooperation, international students, and tourism would also be on the agenda, along with China's territorial ambitions in the South China Sea. Chinese official frustration with the length and uncertainty of Overseas Investment Office recommendations and political decisions on the purchase of New Zealand assets by foreign investors is also expected to be a major focus.

Key will meet President Xi and Premier Li in Beijing but will also visit Xi'an and Shanghai. He said the FTA had been a success for both parties - "two-way trade between New Zealand and China has more than doubled, reaching almost $19 billion. An FTA upgrade would allow us to modernise the agreement and ensure it continues to drive our relationship forward."

Last month Key told the Platinum Primary Producers annual conference in Wellington that the renegotiation of the agreement was a "massive opportunity". The Meat Industry Association has said gaining access for chilled meat exports would open up an "enormous" potential market for the country's $6.83 billion meat export industry.

The Wood Council has in the past called for officials to tackle the obstacles the forestry industry faced as part of the upgrade. Chairman Brian Stanley told Radio New Zealand in March that non-tariff barriers imposed by China meant that his industry took the view that there was no FTA in place.

The upcoming talks have also had an impact on Chinese investment in New Zealand. Shanghai Pengxin withdrew its judicial review of the Overseas Investment Office's decision to reject its bid to buy the Lochinver sheep and beef station near Taupo at the start of the month. Chairman Jiang Zhaobai said at the time that "good relationships and the FTA between our two countries are more important than private business."

Key's trip will also see him address students at Tsinghua University, meet Chinese business leaders and attend the launch of the New Zealand Film Festival in Shanghai. He'll be accompanied by Trade Minister Todd McClay and Primary Industries Minister Nathan Guy for the visit, which takes place between April 17-22.