As the ink dried Monday on the free trade agreement between New Zealand and South Korea, critics claimed it was a second-rate deal that would "handcuff" New Zealand's sovereign right to make laws and regulations.
Prime Minister John Key and South Korean President Park Geun- hye witnessed the signing of the free trade agreement (FTA) by Trade Ministers Tim Groser and Yoon Sang-jick in Seoul.
"The agreement shows the strength of the relationship between New Zealand and Korea. It symbolizes our countries' commitment to economic openness and market integration in the Asia-Pacific region," Key said in a statement from his office.
South Korea was New Zealand's sixth largest export destination for goods and services and its eighth largest import source, with total two-way goods trade of four billion NZ dollars (3.06 billion U.S. dollars).
"At the moment, New Zealand exports into Korea attract 229 million NZ dollars (175.24 million U.S. dollars) a year in duties. Tariff reductions in the first year of the FTA alone will save an estimated 65 million NZ dollars (49.74 million U.S. dollars)."
The agreement had to be ratified by the New Zealand Parliament and the government was keen for it to come into force this year, he said.
Trade Minister Tim Groser said the FTA secured the long-term future of New Zealand exporters whose international competitors were benefiting from the South Korea's other FTAs.
"It reduces barriers to trade and investment, provides greater certainty about the business environment and ensures our exporters remain competitive in each other's market," Groser said in a statement from his office.
The agreement would progressively remove tariffs on 98 percent of New Zealand's exports to South Korea.
"Particular success stories include the removal of wine tariffs of 15 percent on entry into force, and the removal of 45 percent tariffs on kiwifruit effectively five years after entry into force, " said Groser.
The FTA would offer improved protections for New Zealand investors in the South Korean market, and reinforce the attractiveness of New Zealand as a stable investment destination.
However, critics derided it as an agreement with few long-term benefits, while enabling foreign corporations to sue the government over changes in laws and regulations regarding such areas as health, safety and environment.
"Tariffs will remain on milk powder, one of New Zealand's largest exports. Many tariffs, including on wood and beef, will be phased out over long periods of 10 to 15 years," Council of Trade Unions (CTU) economist Bill Rosenberg said in a statement.
"The truth is that the government signed this lame deal because others such as Australia had done lame deals too," Rosenberg said.
"But great dangers lie in the investment part of the agreement. By giving overseas investors the right to sue the government if their profits are threatened, it puts them in a privileged position over New Zealand citizens and businesses," he said.
"This is a case of small, short term gains in exchange for long- term loss of New Zealand's sovereignty to develop its society in the interests of all New Zealanders."
Auckland University Law Professor Jane Kelsey said the invest- state dispute chapter "puts another set of handcuffs on the ability of future governments to regulate in the public interest" at a time when there was an international backlash against this system.
"The New Zealand-Korea deal is reportedly 'playing catch-up' with countries like Australia and Canada, although it has secured a lower level of market access than they did," Kelsey said in a statement.