"The signing and implementation of the China-New Zealand free trade agreement will bring our friendly relationship even closer and deliver tangible benefits to both our countries," Wen Jiabao, China's prime minister, told Helen Clark, his New Zealand counterpart.

 

Clark, leading a 150-member trade delegation to China, described the conclusion of the deal as an "extraordinary moment" for New Zealand.

 

October start

 

When the deal goes into effect on October 1, New Zealand exports to China that now face tariffs of 5 per cent or less will be cut to zero.

 

There will be a staggered timeframe for cuts on New Zealand exports that face larger tariffs.

 

Tariffs on dairy products, a primary New Zealand export, will be phased out over a longer time frame, taking until 2019 when almost all of the country's current exports to China will be tariff free.

 

The pact is China's 15th free trade agreement.

 

It is negotiating another dozen pacts, including with Australia, Peru and South Africa.

Talks on the agreement started in November 2004 after New Zealand became the first developed country to grant China market-economy status - a precondition that Beijing sets for negotiating a free trade agreement.

 

Export growth

 

Phil Goff, New Zealand's trade minister, said his country's exports to China are projected to grow between NZ$225m ($177.6m) and NZ$350m a year more than they would have without the agreement.

 

The pact includes a provision allowing China to send 1,800 skilled workers to New Zealand at any one time.

The agreement also creates a tariff quota for wool, which will be duty-free up to 25,000 tonnes next year with an annual growth rate of 5 per cent over 8 years to 2017.