Tuesday, July 16, 2024

NZ secures historic free trade agreement with EU

New Zealand and the European Union have concluded negotiations on a major free trade agreement (FTA), which is set to unlock 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,” Ms 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 Prime Minister said the complete removal of duties on the majority of products New Zealand exports to the EU was a major achievement in a deal that covers market access into 27 European countries.

It’s the fifth Free Trade Agreement the Government has concluded in the past five years and sits alongside upgrades to 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,” the Prime Minister said.

Minister 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,” he 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, the Minister said,

“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.”

The FTA will also help to level the playing field and create significant opportunity for more local businesses to diversify into this high-value market, Mr O’Connor said.

“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.”

He said the deal 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,” Mr O’Connor said.

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.

The draft text of the Agreement will be released in the weeks to come.

More information, and economic modelling, is available at www.mfat.govt.nz/nzeufta

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