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The last few weeks have been big for New Zealand in international trade. We have signed a new Free Trade Agreement (FTA) with the European Union (EU) and the UK formally joined the Comprehensive and Progressive Agreement for Trans-Tasman Pacific Partnership (CPTPP) at the Ministerial-Level CPTPP Commission Meeting hosted by New Zealand.
As acknowledged by Prime Minister Hipkins in his Foreign Policy Speech on 7 July, expanding trade opportunities for New Zealand exporters is central to the Government’s economic plan. In this brief counsel, we provide an update on both steps of significance for international trade and New Zealand.
NZ-EU FTA: signed after a four-year negotiation
The EU is New Zealand’s fourth largest trading partner. New Zealand is intending to ratify the NZ-EU FTA by mid-2024. Once in force, the Government anticipates the FTA will:
- Increase New Zealand exports to the EU by $1.8 billion a year, principally in the primary sector;
- Immediately remove duties on over 90% of New Zealand goods exports to the EU;
- Allow for $100 million immediate tariff savings, reducing this barrier to trade – reportedly the highest immediate savings for any NZ FTA;
- Immediately remove tariffs on key exports including kiwifruit, Mānuka honey, fish and seafood, onions, wine and industrial products; and
- Release a small amount of new quota access for meat and dairy products. (The Meat Industry Association reports that the new beef quota accounts for less than 2% of New Zealand’s annual beef exports).
For details on tariffs and customs procedures, geographic indications, and innovative provisions incorporating key mutual values between the parties, including on sustainability, gender, and Māori trade, see our commentary, published in June 2022 when the FTA was announced.
United Kingdom welcomed to the CPTPP
New Zealand hosted the high-level CPTPP Commission Meeting in Auckland on 15-16 July, at which the UK’s accession was announced.
The New Zealand Government welcomed the UK to the CPTPP, saying it would “strengthen the rules-based trading system in our region” and complement the outcomes of the NZ-UK FTA now in force.
The Government has released impressive statistics alongside the announcement:
- With the inclusion of the UK, CPTPP now covers more than 500 million people globally and is worth over 15% of the world’s GDP; and
- CPTPP delivered tariff savings of more than $330 million on New Zealand exports in its first two years alone (2019 and 2020).
The UK’s robust accession process set a good precedent for future economies wishing to join. Attention now turns to the other economies wanting to join, not least, the two next in line: China and Taiwan. Export NZ notes that no progress was made at the Ministerial meeting on reaching a decision about how to handle the new accession applicants, although useful discussions were held on Customs cooperation and digital trade, along with finalising terms of reference for a review of the CPTPP agreement.
Meanwhile, the dispute settlement proceedings launched by New Zealand last year against Canada, are continuing at pace. The dispute relates to Canada’s administration of dairy tariff rate quotas under the CPTPP, as set out further in our latest World Watch publication.
The dispute panel hearing took place last month and, according to the Ministry of Foreign Affairs and Trade website, the panel is expected to publish its final report in September.
Our thanks to Sarah Ather for her help in preparing this article.