Free trade talks between New Zealand and Hong Kong have ground to a halt over rules to determine where export products are made and their level of local content, officials said on Thursday.

Trade Negotiations Minister Jim Sutton told National Radio negotiations were deadlocked over the "rules of origin" which will apply to goods exported to each other, especially apparel, textiles and footwear.

He said there are fears unless tough import restrictions are put in place that New Zealand could be deluged with cheap clothing and shoes made in mainland China.

However, trade chiefs in Hong Kong are against the plans as most its clothing and footwear exports are "processed" in mainland China, although that term can be used to describe anything from complete design to just packaging.
But Sutton, who emphasised both parties are keen on a free trade agreement, said Hong Kong is also concerned that accepting such a deal will set a precedent for its trade with the US and EU.