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New Zealand’s trade negotiators have scored a coup in a new free trade deal with the UK.
Their success gave the PM something to cheer about today, taking our minds off Covid-19 and all its grim impacts on the way we live.
She declared:
I am delighted to announce today that following a conversation with Prime Minister Johnson last night, New Zealand and the United Kingdom have Agreed in Principle a historic high-quality, comprehensive and inclusive free trade agreement.
I’m joined today by the Minister for Trade and Export Growth, Hon Damien O’Connor, who is currently isolating after having just returned from Europe. His tireless work with his UK counterparts has been key in securing this agreement.
Fonterra led the country’s exporters in cheering the outcome, with CEO Miles Hurrell applauding it as “a fantastic result for New Zealand”.
Damien O’Connor said it was crucial the deal achieved “comprehensive and commercially meaningful access” for NZ exporters and businesses, and especially to those sectors that are the backbone of NZ’s economy such as dairy and meat producers.
Under the agreement announced today, tariffs on 97% of goods will go once a final agreement is settled, with all tariffs removed within 15 years.
That’s expected to save exporters $37.8m a year.
The UK is New Zealand’s seventh largest trading partner, with two-way trade worth $6bn in the year to March 2020.
The government thinks exports to the UK will increase as much as 40%, and benefit the economy by $970m.
Removing barriers to trade will also help exporters diversify away from single markets like China, on which some authorities believe NZ has become too dependent.
NZ will remove tariffs on all UK exports as soon as the FTA comes into force.
NZ beef and sheep meat exporters may be disappointed that it will take 15 years before they get full free access to the UK but in the interim, the tariff-free quota is being increased.
Butter and cheese will have free access after five years. NZ exporters of other dairy products, apples and mussels will have free access after three years.
As with meat exports, conditions for exporters will be improved during the transition period.
The Meat Industry Association welcomed the FTA, noting the NZ red meat sector has not had quota free access to the British market since the UK joined the European Union in 1973.
The association’s chief executive, Sirma Karapeeva, said:
“Following the UK leaving the EU, NZ’s 1300 tonne beef quota was split between the UK and the EU, leaving NZ with only 454 tonnes of beef access into the UK. Outside of this quota, NZ beef exports attracted tariffs of up to 70%, meaning virtually no out of quota trade occurred.
“Improved access will allow companies to deepen and expand relationships, and crucially, compete on a level playing field with our international competitors.
“While the red meat sector is disappointed in the length of the transition period, and quality of access is often in the detail of trade agreements, we recognise that this was a difficult negotiation and want to acknowledge the hard work of negotiators and the Minister to achieve this result.
“With full tariff elimination after 15 years and quota volumes that grow until that time, companies will be able to build their interests in the UK market.”
PM Jacinda Ardern indulged in a bit of hyperbole when she spoke of “incredible gains” for exporters with the immediate elimination of all duties on 97% of NZ’s existing exports to the UK, including wine, honey, onions, a range of dairy products, and most industrial products which, once fully implemented, are expected to save exporters $37.8 million per year based on current export volumes. She said:
“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 two countries will now work towards getting a final agreement in place just over a year after talks first began in June last year. Ardern said that would take place over the next few months, and it was hoped to have the deal in force “by next year”.
NZ, after Australia, is the second country to secure a Free Trade Deal with the UK, post Brexit.
“The market access outcomes are among the very best New Zealand has secured in any trade deal, a point made to me by one of our most seasoned negotiators,” Ardern said.
“It’s one of our best deals ever and secured at a crucial time in our Covid recovery … this is a huge deal for NZ.”
Ardern said she spoke to UK Prime Minister Boris Johnson last night
“… to mark this historic moment and its importance in forging a stronger and more dynamic future relationship between two close friends and partners”.
The deal served NZ’s economy and exporters well as NZ reconnected, rebuild and recovered, she said.
In a statement, Johnson described the new trade deal as “the cherry on the top of a long and lasting partnership between the United Kingdom and NZ”.
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Point of Order 