New Zealand and the United Kingdom (UK) have agreed in principle on a free trade deal to reduce tariffs, improve trade services, and strengthen Britain’s candidacy to the Trans-Pacific trade agreement.
The prime ministers (PMs) of both countries, Jacinda Ardern and Boris Johnson, reached an agreement during a virtual meeting on Wednesday after 16 months of negotiations. New Zealand is the second country after Australia to have secured a free trade agreement with the UK in the post-Brexit era.
In a statement, British PM Johnson said, “This is a great trade deal for the United Kingdom, cementing our long friendship with New Zealand and furthering our ties with the Indo-Pacific.”
Likewise, during a press conference, New Zealand’s PM Ardern said, “This deal serves New Zealand’s economy and exporters well as we reconnect, rebuild and recover from COVID-19, and look forward into the future.” She added that tariffs on 97% of products will be removed for both countries when the deal is implemented. Furthermore, Ardern said the deal will accelerate New Zealand’s recovery from the COVID-19 pandemic and significantly cut costs for exporters and businesses.
New Zealand’s Trade Minister, Damien O’Connor, said, “Pre-COVID estimates projected that New Zealand goods to Britain will increase up to 40 per cent and its GDP will benefit up to 970 million NZ dollars (699 million US dollars) due to the FTA.” He added that around 250 environmentally beneficial products had been shortlisted for tariff elimination.
It has been reported that the deal will provide a boost of $1 billion to New Zealand’s economy. Last year, trade between the UK and New Zealand amounted to $3.17 billion. Over five years, the deal will remove tariffs on dairy products and eliminate taxes worth $14.1 million on wine, New Zealand’s largest export to the UK. Additionally, the agreement will give New Zealand’s beef and sheepmeat access to the British market, and the tariffs on these products will be eliminated after 15 years.
The deal will also revive old trade ties between the UK and New Zealand from before Britain’s admission into the then European Economic Community in the 1970s. At the same time, the agreement furthers the UK’s Indo-Pacific strategy to counter China’s global dominance. In addition, improved business travel arrangements under the deal will benefit British workers and allow them to work in New Zealand more easily.
Apart from this, the deal also strengthens the UK’s bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) between 11 countries; the UK hopes to become a member by the end of 2022.
Meanwhile, the opposition Labour party has criticised the deal, saying it harms British farmers and doesn’t deliver jobs and economic growth. Echoing similar sentiments, National Farmers’ Union President Minette Batters said, “The government is now asking British farmers to go toe-to-toe with some of the most export-orientated farmers in the world, without the serious, long-term and properly funded investment in UK agriculture that can enable us to do so.”
Officials have not yet set a date for implementing the trade agreement as some details are being finalised. The deal is likely to come into effect next year.