UPDATE 1-China, New Zealand upgraded free trade deal to be signed on Tuesday- sources

(Adds details)

By Praveen Menon

WELLINGTON, Jan 26 (Reuters) - A deal to upgrade the free trade pact between China and New Zealand, which was agreed upon after years of negotiations, will be officially signed on Tuesday, sources aware of the discussions said.

New Zealand's Prime Minister Jacinda Ardern announced the conclusion of the deal in November 2019.

The New Zealand government did not comment on the matter. The Chinese Embassy in Wellington could not be immediately reached for a comment.

New Zealand had said the upgraded agreement would make exporting to China easier and reduce compliance costs for New Zealand exports by millions of dollars each year.

The upgrade would ensure nearly all New Zealand's wood and paper trade to China will have preferential access over the next 10 years, New Zealand's trade ministry had said in a statement after conclusion of the deal in November.

New Zealand was the first developed country to sign a free trade agreement with China in 2008, which has long been touted by Beijing as an exemplar of its firsts with Western countries.

China is now New Zealand’s largest trading partner, with annual two-way trade of over NZ$30 billion ($21.58 billion). Both nations have been working to upgrade the agreement for years.

But ties have been tested under Ardern's government as New Zealand criticized China’s influence on small Pacific islands and raised human rights concerns about Muslim Uighurs in China's Xinjiang region. Ardern also backed Taiwan’s participation at the World Health Organization (WHO) despite a warning from Beijing.

The trade pact with New Zealand also comes when Beijing's ties with neighbouring Australia worsened after Canberra called for an independent investigation into the origins of the coronavirus pandemic, which was first reported in central China.

Australia has appealed to the World Trade Organization to review China's decision to impose hefty tariffs on imports of Australian barley.

New Zealand, which will host the regional Asia Pacific Economic Cooperation summit this year, has said it would be willing to help negotiate a truce between China and Australia.

($1 = 1.3902 New Zealand dollars) (Reporting by Praveen Menon; Editing by Aurora Ellis)

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