In the midst of the big U.S.-China trade talks/tariff wars that are ongoing, it is worth noting some much smaller trade talks that have been taking place between New Zealand and China. The basic story is that New Zealand and China signed a trade deal in 2008, and have just now completed an "upgrade" to that deal. There are some differences in the nature of the U.S.-China talks and the New Zealand-China talks, but nevertheless, there may be some lessons to draw from the New Zealand-China situation.
The first thing to mention is that both sides consider the original deal to be a success. Here's how New Zealand described it:
The New Zealand-China Free Trade Agreement (FTA) has been a success story. Since the FTA came into force in 2008, two-way trade (exports and imports of goods and services) has more than tripled from $9 billion to over $32 billion, and the FTA has been a catalyst for trade and economic cooperation between our countries.
Like most economists, I am skeptical that we can learn much from bilateral trade balances, but nevertheless, take a look at the evolution of the New Zealand-China trade balance after the agreement was signed, after which New Zealand's deficit turned into a surplus:
So what are New Zealand and China selling to each other?
In the March 2019 year, the top exports to China were milk powder, butter, and cheese, reaching $4.5 billion and accounting for one-quarter of New Zealand’s exports to China.
Logs and wood were the second-largest export, worth $3.1 billion.
Travel was also a significant contributor to New Zealand’s overall surplus with China, worth $3.0 billion. Spending by holidaymakers and international students made up most of this.
In the March 2019 year, imports from China were valued at $13.1 billion. Top imports were electrical machinery and equipment (such as mobile phones), mechanical machinery and equipment (such as portable computers), and textiles and textile articles (such as clothing).
The upgrade to the FTA is not revolutionary, but rather just adds a bit of liberalization and updates a few provisions: