The New Zealand Wood Council is welcoming the chance to upgrade New Zealand's free trade agreement with China, and up our forestry exports in the process.

Prime Minister John Key has announced talks will begin on improving the agreement that came into force eight years ago, reviewing both dairy quotas and reducing forestry trade restrictions.

Wood Council Chair Brian Stanley said they'd like to see more production and processing done here in New Zealand and sold into China at a globally competitive price.

He said despite fears that could increase building costs here in New Zealand, it's the cost of land that's causing problems for building houses, not the cost of timber.

"We've done a survey on this, and the true cost in real terms of timber has not increased at all over the last 20 years," he said.

Mr Stanley said removing some of the non-tariff barriers would help level the playing field, especially for processed sawn lumber.

He said countries like Canada and Chile have a much better deal selling processed lumber into China.

"So all of those non-tariff trade barriers we're up against, not only in China but all over the world are making it hard for New Zealand producers to be competitive globally."