New Zealand and the United Kingdom have signed a Free Trade Agreement (FTA) that will accelerate Aotearoa's COVID-19 recovery, say Prime Minister Jacinda Ardern and Minister for Trade and Export Growth Damien O'Connor.
The major points of the FTA are:
- United Kingdom to eliminate all tariffs on New Zealand exports, with duties removed on 99.5 percent of current trade from entry into force
- New Zealand's GDP expected to boost between $700 million and $1 billion
- New Zealand exporters to save approximately $37 million per year on tariff elimination alone from day one
- New duty-free quota access for beef, sheep meat, butter, and cheese, with all quotas and tariffs removed after five to 15 years.
"This is a gold-standard free trade agreement. Virtually all our current trade will be duty-free from entry into force, including duty-free quotas for key products like meat, butter and cheese, helping to accelerate our economic recovery," Ardern says.
"This is our first bilateral trade agreement to include a specific article on climate change and includes provisions towards eliminating environmentally harmful subsidies, such as harmful fossil fuel subsidies, and prohibiting fisheries subsidies which lead to overfishing.
"It also includes a ground-breaking Māori Trade and Economic Cooperation chapter that will create a platform for cooperation on issues important to Māori."
Ardern adds that the United Kingdom and New Zealand are historically "great friends and close partners", and this agreement will bring the two nations closer.
The FTA was signed in London by O'Connor and the United Kingdom's Secretary of State for International Trade Anne-Marie Trevelyan.
O'Connor says as soon as the FTA enters into force, the deal will cut costs for exporters and create opportunities for New Zealand businesses to grow and diversify their trade.
"It's estimated New Zealand goods exports to the UK will increase by over 50 percent through the agreement," he says.
"Our largest export to the UK is wine - approximately $500 million. Overnight $14 million of wine tariffs will evaporate. New Zealand's honey exporters will no longer face a $16 duty for every $100 worth of honey they send to the UK.
"Our dairy and red meat sectors will, for the first time since the 1970s, have tariff-free access that will grow through significant quotas until being fully liberalised. This is a commercially meaningful and excellent deal."
O'Connor says that by removing tariffs and other barriers, exporters will have a new era of market access that will level the playing field with the United Kingdom's other trading partners.
"This agreement reflects the Government's Trade For All agenda, ensuring this FTA works harder both for our economy and our society. It includes commitments on SMEs, trade and gender, trade and development, and consumer protection," O'Connor says.
The FTA also includes commitments to the movement of business people, making it easier to do business in the UK.
The United Kingdom was New Zealand's seventh-largest trading partner pre-COVID, with two-way trade worth $6 billion up to March 2020.
O'Connor says they are aiming for this agreement to be in force by the end of 2022 after New Zealand and the United Kingdom have ratified it through their respective parliaments.