New Zealand secures major free trade deal with European Union
- Export revenue to the EU to grow by up to $1.8 billion annually on full implementation.
- Duty-free access on 97% of New Zealand’s current exports to the EU; with over 91% being removed the day the FTA comes into force.
- NZ exporters set to save approx. $110 million per annum on tariff elimination, with $100 million slashed from day one.
- Immediate tariff elimination for all kiwifruit, wine, onions, apples, mānuka honey and manufactured goods, as well as almost all fish and seafood, and other horticulture products.
- New quota opportunities worth over $600m in annual export revenue for dairy and red meat sector once fully implemented, with an eight-fold increase in beef access to the EU market.
- New Zealand service providers able to access EU market on an equivalent basis to local and foreign service providers in a range of sectors including education.
- Once fully implemented, the EU FTA delivers more to NZ GDP than the UK-FTA.
- EU FTA becomes the 5th major trade deal in 5 years, opening new markets for NZ exporters.
New Zealand and the European Union have concluded negotiations on a major free trade agreement (FTA), which unlocks access to one of the world’s biggest and most lucrative markets, Prime Minister Jacinda Ardern and Trade and Export Growth Minister Damien O’Connor announced today.
“Our EU-NZ FTA is expected to increase the value of New Zealand’s exports to the EU by up to $1.8 billion per year from 2035. For comparison that’s more lucrative than the benefits derived from our recent UK FTA,” Jacinda Ardern said.
“It’s a strategically important and economically beneficial deal that comes at a crucial time in our export led COVID-19 recovery.
“It delivers tangible gains for exporters into a restrictive agricultural market. It cuts costs and red tape for exporters and opens up new high value market opportunities and increases our economic resilience through diversifying the markets that we can more freely export into.
“The complete removal of duties on the majority of products New Zealand exports to the EU is a major achievement in a deal that covers market access into 27 European countries.
“This is the fifth Free Trade Agreement the Government has concluded in the past five years and sits alongside upgrades to our existing agreements with Singapore and China. The increase in market access we’ve negotiated means 73.5% of our global exports are now covered by an FTA, up from only around 50 percent when we took office.
“New Zealand exporters offer some of the best products in the world and the Government will keep working alongside industry and business to unlock access and opportunities like those delivered into Europe,” Jacinda Ardern said.
Damien O’Connor, who has spent the week in Brussels negotiating with his counterparts said the deal provided access for products that were previously locked out in the historically difficult to access European market.
“This agreement delivers on what has been a long-standing objective of successive New Zealand governments - an FTA with the European Union, which will help accelerate New Zealand’s economic recovery at a time of global disruption,” Damien O’Connor said.
“The deal provides duty-free access on 97% of the New Zealand’s existing goods trade to the EU within seven years, 91% from day one.
“There are some big wins in here. The EU is the largest export market for New Zealand kiwifruit growers, and the complete removal of tariffs delivers more than $37 million in annual savings on kiwifruit alone from day one.
“For fish and seafood exports, annual tariff savings will reach $20 million a year.
“We’ve fought hard for our dairy and beef exporters and the deal could deliver up to $600 million in additional export revenue if access is used and once the agreement is fully in effect.
“We’ve secured an eight-fold increase in the volume of beef we can export into the EU.
“We have also secured improved access for our butter and cheese producers, some of which will now be able to be trade with the EU for the first time in many years.
“With total savings on tariffs worth $110 million annually, $100 million up front, the deal will make our exports immediately more competitive in the EU market and provides a platform for growth.
“This FTA also helps to level the playing field and creates significant opportunity for more great Kiwi businesses to diversify into this high-value market.
“This is a good news for our services exports too. The deal, will bring the EU services market closer to New Zealand for our entrepreneurs by reducing red tape and making it easier to do business on the ground in a market of nearly 450 million high-value consumers.
“Importantly, the services and investment ‘Most Favoured Nation’ outcome will ensure the FTA remains at the cutting edge, with New Zealand able to receive the benefit of services market access and investment treatment the EU may agree to in future FTAs.
“It also delivers a positive outcome for New Zealand businesses seeking access to EU’s large government procurement market for goods and services worth more than $3 trillion. This deal provides enhanced access to a range of EU procurement opportunities across all levels of government, including new opportunities in healthcare, airports and ports.
“Consistent with our approach to trade negotiations, the agreement contains legally enforceable commitments on climate action, environment and labour standards and gender equality. New Zealand is pleased to be the EU’s first ever FTA partner to conclude such an outcome.
“This agreement reflects the Government’s Trade For All agenda, ensuring this FTA works harder both for our economy and our society. Importantly it preserves the unique status of te Tititi o Waitangi, ensuring the Government’s ability to meet its obligations to Māori. In addition to the inclusion of New Zealand’s Treaty of Waitangi exception, Māori interests were a focus in negotiations and are reflected across the agreement," Damien O’Connor.
The FTA includes a Māori Trade and Economic Cooperation chapter to enhance the ability for Māori to access the benefits from the FTA, including through the development of business links between Māori and EU enterprises (with a particular emphasis on SMEs), and focusing on science, research and innovation.
The EU is New Zealand’s fourth-largest trading partner with two-way goods and services trade was worth NZ$17.5 billion in for the year to December 2021.
More information, and economic modelling, is available at www.mfat.govt.nz/nzeufta
The draft text of the Agreement will be released in the weeks to come, once it has been prepared for publication.