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.
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.
Reports this week indicate that New Zealand is getting closer to a free trade deal with the UK. Trade Minister Damien O’Connor says NZ’s negotiators have been working around the clock to reach the shared objective of an FTA agreement in principle by the end of August.
The problem, as Point of Order understands it, is that NZ has been offered the same arrangements as Australia on agricultural products, with a phase-out of tariffs over 11 years.
As NZ trade expert Stephen Jacobi argues:
“It would be absolutely ridiculous if we were to enter into an FTA with the UK that did not put forward the prospect of free trade, zero tariffs in lamb and beef and dairy within a reasonable timeframe.”
Britain’s Trade Secretary, Liz Truss, says teams are working around the clock to get the deal done in the coming weeks.
“We are both big fans of each other’s high-quality products, so this could be a huge boost that allows British shoppers to enjoy lower prices and British exports to be even more competitive,” she said.
With trade minister Damien O’Connor due in the northern hemisphere in September, London’s Daily Telegraph reports a free trade agreement between the UK and NZ is close.
Citing sources in the UK Department of international Trade, the newspaper says hopes are growing that a deal can be secured “within weeks.” An announcement on New Zealand before the end of August is “highly possible” as discussions intensify.
Australia’s agreement with the UK was settled in June. The UK Government hopes to get it signed off by Boris Johnson and his counterpart Scott Morrison when the latter visits Britain in October for the Cop26 climate conference.
The Daily Telegraph’s source said trade secretary Liz Truss would be driving a hard bargain on key areas of interest.
“New Zealand will need to give us more on services, mobility and investment if they want a deal. If we have to go beyond then into September to get the best deal, then so be it.”
The Telegraph says the NZ FTA is expected to have a negligible effect on the UK’s GDP, with modelling by the trade department even indicating that an extensive deal could mildly reduce Britain’s national output.
Recent events have provided a potentially awkward backdrop for what may be the final weeks of talks. Amazon last week announced that it would shift production of its highly anticipated Lord of the Rings TV series from New Zealand to the UK, in a major blow to the country’s creative and tourism industries, the paper said.
The government has been beating the drum on the prospects for a free trade deal with the United Kingdom, which it claims is part of the wider work it is undertaking to support New Zealand’s economic recovery from Covid-19.
Following Trade Minister Damien O’Connor’s sessions with UK Trade Secretary Truss in London to push along the bilateral negotiation, officials’ teams will spend the coming weeks finalising FTA details with the aim of reaching agreement in principle in August.
Foreign Minister Nanaia Mahuta told Parliament NZ is working to achieve a high quality comprehensive trade deal.
We have had the chance to scan the new Australia-United Kingdom Free Trade agreement and – if Trade Minister Damien O’Connor can negotiate similar terms for us – the prospects look hearteningly good for NZ.
Beef and sheep meat tariffs on Australian exports to the UK will be eliminated after 10 years. Sugar tariffs will be removed after eight years, and dairy tariffs after five years.
Short and medium grain milled rice will get immediate duty-free access once the FTA is in place.
During the countdown to tariff-free trade, Australian producers will gain incremental access to the British market. Beef producers gain immediate access to a duty-free quota of 35,000 tonnes (rising to 110,000 tonnes a year in a decade). With sugar exports, producers have immediate access to a duty-free quota of 80,000 tonnes, rising by 20,000 tonnes each year.
Trade minister Damien O’Connor dines with his UK counterpart Liz Truss tomorrow to begin the heavy-lifting on a NZ-UK free trade agreement.
The early signs are ominous. Ozzie PM Scott Morrison managed to attend part of the G7 meeting in Cornwell where Australia’s FTA agreement was raised with the UK’s Boris Johnson.
Morrison says he’s waiting for ‘the right deal’ before the UK-Australia free trade agreement (FTA) is finalised, and the UK is eager to launch its post-Brexit economy by securing free trade agreements covering 80% of its trade within the next three years.
Farmers who believed Labour when it said it wanted to double agricultural exports may have experienced a sense of disillusion as they absorbed the messages of Budget 2021. While the government is allocating $1.3bn to modernise rail infrastructure and build locos and wagons in Dunedin, it could find only $62m for agriculture.
Someone has calculated that the country’s 40,000 farm businesses, if they shared the $62m, would each receive $1550 or $29 a week (less than the ongoing minimum benefit increase).
This comparatively meagre sum is to be applied as follows:
$37m towards a national integrated farm planning system for farmers and growers.
$24m towards agricultural greenhouse gas mitigation research and development.
$900,000 to collect vital statistics on agricultural production, such as greenhouse gas emissions.
Trade Minister Damien O’Connor trumpeted this week that the New Zealand and Chinese governments had signed an upgrade to the free trade agreement between the two countries.
We suspect he will be more coy about his contribution to the New Zealand–Australia relationship because his trumpeting – loud enough to cross the Tasman – included advice to Canberra to “show respect” and act more diplomatically towards China.
Senior Australian government officials are infuriated at Mr O’Connor’s comments, which they see as a continuing pattern of New Zealand not joining other allies in standing up to China’s growing assertiveness in recent months.
Trade Minister David Parker is gung-ho about getting a trade deal with the UK sewn up. He says NZ and the UK have strong trade and economic ties.
“NZ is pleased to be among the first countries to negotiate a trade agreement with one of our oldest friends”.
With a New Zealander, Crawford Falconer, in charge of the UK trade negotiating team, Parker, like the rest of the country, will be hoping for a favourable deal.
But as the UK is getting to grips with what NZ is seeking, it is also locked in negotiations with Australia and – moreover – is looking to seal trade deals with the US and Japan. In that context, the negotiation with NZ may seem only a footnote.
For NZ, the difficulty may be that if it gets a deal done first with concessions from the UK, particularly on dairy and meat, then the UK may feel obliged to offer the same terms to Australia, and perhaps even the US.