News

Back

New Zealand and the United Kingdom reached FTA Agreement in Principle

On 20 October 2021, New Zealand and the UK reached agreement on the key elements of a new high quality, comprehensive and progressive free trade agreement (FTA). These are set out below.

Underpinning this Agreement in Principle is the legal text of the agreement. In most areas this has also been substantially concluded. Work to finalise the text in accordance with this document will continue over the coming weeks, alongside the commencement of the legal review and verification of the agreement.

This Agreement in Principle does not create any legally binding obligations as work is continuing to finalise the legal text of the FTA. Once the text has been finalised and legally verified, and domestic approval processes have been completed, arrangements will be made for the signing of the FTA.

The UK is a crucial market for some of our key exports, with two-way trade worth $6 billion pre-COVID, as well as being a significant source of and destination for New Zealand investment.

A NZ-UK FTA supports diversification of our trading relationships, a key part of New Zealand’s trade strategy.

The pandemic has severely disrupted the global economy. A high quality, comprehensive and inclusive FTA will accelerate New Zealand’s economic recovery by providing New Zealand exporters with more favourable access to the UK market. This will enable us to build our trade back up to, and go beyond, pre-COVID levels.

The market access granted under the FTA will ensure New Zealand businesses will be able to compete on a level playing field in the UK alongside other countries that already enjoy preferential access (tariff and quota free) under existing UK trade agreements.

Initial UK modelling conducted pre-COVID predicted New Zealand exports could rise by up to 40% at full implementation of an FTA with the UK - an estimated increase in New Zealand GDP of $970 million. UK exports to New Zealand were also predicted to grow – by around 7.3%.

The market access outcomes are among the very best New Zealand has secured in any trade deal:

  • The UK will eliminate all tariffs on New Zealand exports, with the vast majority of these (over 97%) being removed the day the FTA comes into force. For key products where tariffs will be removed over time, we have secured sizeable duty-free quotas which cover current exports and allow for significant growth in trade.
  • The UK’s market access commitments for services exporters and investors are among the best it has agreed with any FTA partner. The UK has also committed to extend any future market opening agreed in future FTAs to New Zealand.
  • The UK has agreed to extend visa commitments for business people, adding more sectors and categories to the existing access under the WTO.
  • Modest improvements have also been made in government procurement, with the UK expanding the types of service contracts New Zealand providers can bid for.
  • Non-tariff barriers have also been tackled. For example, the FTA will recognise a number of New Zealand wine-making practices and address burdensome labelling and certification requirements faced by New Zealand’s wine makers.
  • Many other outcomes will make trade with the UK easier, less costly, and more accessible for small business. This includes streamlined customs procedures and provisions that will facilitate digital trade and promote connectivity between New Zealand and the UK.


Source: www.mfat.govt.nz