New Zealand and the United Kingdom have announced they’ve reached agreement on the terms of a free trade deal, which the Government estimates could be worth $1 billion to the New Zealand economy.
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New Zealand would be able to send over its wine, honey, onions and hoki without being hit with tariffs imposed by the UK, while the UK can export its gin, chocolate, motorhomes and caravans and some jewellery without being hit by ours.
The in-principle deal with Britain would see it eliminate 97 per cent of its tariffs on the day the agreement comes into force, while New Zealand would also remove its limited tariffs on some UK goods.
A tariff is a tax imposed by a country on goods being imported in order to protect its domestic industries. The agreement is in principle – which means the finer detail still needs to be negotiated and agreed upon by both sides.
Officials still have to work through the finer details and the government hoping to have that completed this year, and the free trade agreement (FTA) to be signed in 2022.
Tariffs or quota restrictions would remain on some products over a period between three to 15 years, including on beef, sheep, butter, cheese, apples and mussels, but there have been large increases in the volumes New Zealand can export before tariffs apply.
Prime Minister Jacinda Ardern said the immediate tariff elimination on most products could save New Zealand exporters and business about $38 million – making a special mention of wine, the top product exported from New Zealand to the UK.
“We send around $463m of high-quality wine to the UK each year, the agreement overnight will remove $14.1m of tariffs annually.”
Ardern said wine was the “first thing” mentioned by UK PM Boris Johnson when she spoke to him about the agreement.
She called the deal the “very best” New Zealand has secured, and a “historic, high quality, comprehensive and inclusive free trade deal”.
Trade Minister Damien O’Connor said honey exporters would no longer pay $16 for every $100 of product they send to the UK, once the final agreement is signed.
O’Connor said he hoped to have the details ironed out this year, while Ardern anticipated the deal to be signed next year and hoped the benefits could be seen then.
On the restrictions and tariffs that remain on the dairy, lamb and beef and apple industries, Ardern said “there are immediate benefits for those sectors too”.
Highlights of the deal:
– Wine, honey, onions, hoki – free access from day one
– Mussels – complete removal of tariffs over three years
– Apples – No tariffs in New Zealand’s apple season (Jan-July), and a no tariff quota from August to December (any exports above 20,000 tonnes) for three years, before free access
– Butter and cheese – Reducing tariffs over five years, before free access
– Sheep and beef meat – An increasing tariff-free quota over 15 years, before free access.
Ardern said there was work going on outside of the FTA deal to improve working holiday visa arrangements.
“These changes will improve the access that young New Zealanders will have in the years to come and live and work in the UK,” she said.
Trade between New Zealand and the UK is worth $4 billion – with New Zealand exporting $1.98b to June 2021, while $2.09b was imported from the UK.
Boris Johnson said the deal was the “cherry on the top of a long and lasting partnership between the UK and New Zealand”.
He said it would be “good for both our economies, boosting jobs and growth”.
On trust with the UK, Ardern said New Zealand has “got an agreement in principle here, the deal is done”.
Australia and the UK also hit their ‘in-principle’ agreement in June – but are now wrangling with the detail as Australian trade minister Dan Tehan left the UK last week without signing the final agreement.
