(Reuters) – China is unlikely to join talks on an Asia-Pacific free trade agreement anytime soon, but eventually the world's No. 2 economy will have to be involved in the pact, New Zealand Trade Minister Tim Groser said on Wednesday.

Speaking at a New Zealand-China business event, Groser also said that the island nation had to up its game when dealing with Beijing, its largest export market, following a food safety scare in China concerning New Zealand dairy products.

"It is deeply improbable that any country will now join the TPP-12 as we seek to close the deal," Groser said in a speech in Auckland, referring to the possibility of Beijing joining the 12-nation Trans-Pacific Partnership talks now underway.

"But the whole point of TPP was to act as a building block for an entire Asia-Pacific zone of trade and economic integration. That, by definition, could not happen without the eventual involvement of China whether literally in TPP or some logical extension of it."

Talks have been underway for three years to establish a free-trade bloc that would extend from Vietnam to Chile to Japan. A deal involving the 12 nations would encompass 800 million people and around one-third of global trade.

Following talks on the deal in Indonesia this month, the United States said it was optimistic that a deal could be reached by year-end, despite opposition from a number of countries concerning some of its terms.

Groser said the apparent discovery in August of a potentially fatal bacteria in a product manufactured by Fonterra (FSF.NZ), the world's largest dairy exporter, which led to the recall of infant milk formula and other products in China, highlighted shortcomings in New Zealand's trade relationship with China.

New Zealand's Ministry for Primary Industries later said the tests showed that the botulism scare had been a false alarm, and Fonterra and the agricultural trade body were criticised at home and abroad for not communicating better with their Chinese counterparts.

"I sense a growing consensus that our very success in China has run ahead of NZ Inc's capacity to service this exploding economic relationship," Groser said, adding that New Zealand companies operating in China must becoming more culturally aware of their trade partners.

"The future of New Zealand trade - and the future prosperity of New Zealand - depends on a wide range of language and cultural skills, not just Chinese. But China must be front and center."

New Zealand is one of few non-Asian countries that has a free trade agreement with China. Exports to China have tripled since 2008 when the deal began, driven mainly by dairy and other agricultural products.

Source: Reuters

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