New Zealand and the United Kingdom have agreed in principle the details of a historic Free Trade Agreement (FTA), which will further accelerate our COVID-19 economic recovery say Prime Minister Jacinda Ardern and Minister for Trade and Export Growth Damien O’Connor.
New Zealand is the second country to secure a new free trade agreement with the United Kingdom post Brexit. The deal substantially cuts costs for exporters and businesses and provides greater access to the United Kingdom’s market.
“Prime Minister Boris Johnson and I spoke yesterday evening to mark this historic moment and its importance in forging a stronger and more dynamic future relationship between two close friends and partners,” Jacinda Ardern said.
“This deal serves New Zealand’s economy and exporters well as we reconnect, rebuild and recover from COVID-19, and look forward into the future.
“It’s one of our best deals ever and secured at a crucial time in our COVID recovery,” Jacinda Ardern said.
Here’s a summary of the deal:
- A boost of almost $1 billion to New Zealand GDP, unprecedented access for New Zealand exporters to the UK market
- UK to eliminate all tariffs on New Zealand exports, with over 97% being removed the day the FTA comes into force
- NZ exporters to save approx. $37.8 million per year on tariff elimination alone
- Elimination of tariffs on all honey, wine, kiwifruit, onions, a range of dairy and meat products, and most industrial products
- Significant increases for beef and sheep meat market access
- Working Holiday arrangements to be improved and extended
Prime Minister Boris Johnson said:
“This new trade deal is the cherry on the top of a long and lasting partnership between the United Kingdom and New Zealand.
“It is good for both our economies, boosting jobs and growth as we build back better from the pandemic. We already share deep ties of history, culture and values, and I look forward to the next chapter in our friendship.”
“While our borders have been closed, our exporters have continued providing economic stability, with goods exports holding up at $60 billion over the last year despite what continues to be an unprecedented and unpredictable global environment,” Jacinda Ardern said.
“This deal will cut costs for exporters immediately, creates opportunities for New Zealand businesses to grow and diversify their trade, while boosting the economy as we recover from COVID-19.
“There are incredible gains for our exporters, including the immediate elimination of all duties on 97% of New Zealand’s existing exports to the UK, including wine, honey, onions, a range of dairy products, and most industrial products – which once fully implemented is expected to save exporters $37.8million per year based on current export volumes.
“Beef volumes will increase from 12,000 tonnes to 60,000 tonnes, and for sheep meat they will rise from 149,205 tonnes to over 164,000 tonnes, with free market access after 15 years – putting more money back into the pockets of our farmers while presenting them the opportunity for further growth.
“The lesson from COVID-19 is that we must have as many options for our world-class products to ensure certainty for our primary producers, our economy and our people,” Jacinda Ardern said.
Trade Minister Damien O’Connor said the UK was New Zealand’s seventh largest trading partner pre-COVID, with two-way trade worth nearly $NZ 6 billion to March 2020.
Pre-COVID estimates also projected that NZ goods to the UK will increase up to 40% and that NZ GDP will benefit up to $970 million due to the FTA.
“It was crucial our agreement needed to provide comprehensive and commercially meaningful access for New Zealand exporters and businesses, and especially to those sectors that are the backbone of New Zealand’s economy such as our dairy and meat producers. This deal achieves that,” Damien O’Connor said.
“By removing tariffs and other barriers that have limited the growth of our goods and services trade, as well as our investment connections, our exporters and businesses can now enter a new era of market access they have never before had available.
“This FTA will also include the most ambitious commitments New Zealand has ever negotiated on trade and the environment, and is our first bilateral trade deal to include specific provisions on climate change. The United Kingdom has agreed to take concrete steps to eliminate subsidies on fossil fuels. New prohibitions have been agreed to combat over-fishing.
“And over 260 environmentally beneficial products have been prioritised for tariff elimination – the largest environment goods list ever agreed,” Damien O’Connor said.
The agreement also recognises the unique and historical relationship that exists between Māori and the British Crown which is reflected through an indigenous chapter creating a platform for cooperation on a range of issues important to Māori. New Zealand is the only country globally to successfully include such a chapter in two Free Trade Agreements.
“I want to personally thank Secretary Trevelyan who made progressing this free trade agreement a priority and I look forward to working closely with her on a range of future matters,” Damien O’Connor said.
Prime Minister Jacinda Ardern also announced New Zealand and the UK have committed to a mobility dialogue outside of the FTA that will consider how people-to-people links can be deepened even further. This will include working expeditiously to extend and improve the existing New Zealand-UK Working Holiday/Youth Mobility scheme. Work on this will begin immediately.
“These schemes create opportunities for young New Zealanders to develop their skills and work experience while travelling and living in the UK; and vice versa,” Jacinda Ardern said.
“For many young New Zealanders an overseas experience has become a rite of passage, providing a pathway to develop their skills and work experience while travelling and living in the United Kingdom.
“It is fantastic that we will now work to build on what has been a long tradition between our two countries. We look forward to receiving those from the United Kingdom and providing them the same opportunities on our side of the world,” Jacinda Ardern said.
The agreement in principle released today sets out the key elements of the free trade deal with the UK, with the text to be finalised over the coming months.