New Zealand / UK FTA free trade talks gearing up for fifth round

Talks for a New Zealand and United Kingdom free trade deal are set to gather pace this week and British High Commissioner Laura Clarke says a new survey shows New Zealand traders are positive about its prospects.

"What I think is interesting is it runs a little bit counter to the narrative that you sometimes hear. which is that Brexit makes everything much more difficult or is the UK somehow turning in on itself," she told the Herald.

"And, of course, the opposite is the case because we are out in the world and engaged and taking advantage of the new independence that we have as a result of Brexit."

The fifth round of virtual talks is scheduled to begin tomorrow led by Brad Burgess, New Zealand's ambassador to Ireland.

A sixth round is set down for July.

Trade Minister Damien O'Connor is preparing to leave for London later in the week to meet his counterpart, Liz Truss, before heading to Brussels to crack the whip on the EU-NZ FTA talks.

The survey shows that 35 per cent of New Zealand 's importers and exporters thought it would be easier for New Zealand business to access opportunities in the UK after Brexit.

And it showed that nearly two-thirds of New Zealand importers and exporters believe an FTA will make it easier for New Zealand businesses to access opportunities in the UK.

Laura Clarke says the move to join the CPTPP is part of the UK's "Indo Pacific title". Photo / Mark Mitchell

"It is always quite nice to check what sentiment is because of course Brexit was a long transition," Clarke said.

"It was quite a difficult period in lots of ways, quite a lot of uncertainty and I know that, certainly, for lots of our international partners it was difficult as we resolved what our future arrangements were going to be.

"We've come through that period of relative difficulty and uncertainty and we are into the 'what next' and carving out the UK's role in the world both in terms of trade and foreign policy."

Britain officially left the European Union on December 31, 2019 and doing bilateral trade deals has been a big focus for the UK Government.

It aims to have 80 per cent of its global trade covered by free trade agreements. Two-way trade between New Zealand and the UK was worth about $6 billion in 2019.

Damien O'Connor and Laura Clarke got together last week to talk about the fresh round of talks for a NZ/UK free trade agreement. Photo / Supplied

The survey of 605 New Zealand businesses which either import or export was conducted by Colmar Brunton and commissioned by the British High Commission.

In the talks, the UK has tabled what it considers to be a "commercially meaningful" offer on market access – tariff and quote elimination - and is expecting New Zealand to make progress on a services offer in the fifth round, particularly in relation to financial services.

O'Connor has made it clear in previous press statements that the market access offer is not what New Zealand considers to be acceptable.

"We expect comprehensive tariff elimination, including on agricultural goods, over commercially meaningful timeframes," O'Connor said.

"Currently, that's not what we have on the table, so we have some work to do."

Progress on New Zealand's deal is complicated by Australian FTA talks being conducted in parallel and which are further advanced despite both sets of talks starting at the same time, in June 2020.

The BBC has reported Australia was offered elimination of tariffs over a 15-year period.

The UK and Australia have set themselves a deadline for an in-principle agreement, being next weekend, when Australian Prime Minister Scott Morrison will be a special guest of Boris Johnson at the G7 meeting in Cornwall.

Trade Minister Damien O'Connor earlier this year. Photo / Mark Mitchell

While it is difficult to imagine there will be much difference in the quality of the deals, Clarke says there is no suggestion New Zealand will simply tag along after Australia's.

"Absolutely not. Australia and New Zealand are two very different economies and they are two very different negotiations and I think we are trying to do different things in each negotiation and it is best to look at each on its own and on its own merits."

She said the UK wanted to make fast progress.

"We are also clear that we don't want to go so fast that we don't achieve all those things that we set out to do which is, of course, a really good deal in terms of goods but also a good deal in terms of what we do on services, things like digital trade and also the more innovative areas around indigenous trade, women in trade, the climate and sustainability provisions as well to really show how you can use trade to advance other goods."

The other deal which could have some bearing on the bilateral deals with the UK is its bid to join the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP), which requires the agreement of all 11 original members, including New Zealand.

Australia and UK want to have something to sign next weekend when Australian Prime Minister Scott Morrison attends the G7 as a special guest. Photo / Mark Tantrum

It is the first time in a long time that New Zealand, with a relatively liberalised economy, has had meaningful leverage in trade talks.

A ministerial meeting this week agreed to begin the accession process for the UK by setting up a working group to look at how accession will happen.

O'Connor, in his statement welcoming the move, also said any new member was expected to deliver "the highest standard of access commitments, including on goods, services, and temporary entry for business people."

Clarke does not believe the CPTPP process will complicate the FTA talks at all and says it will pave the way for it.

She says signing up to the CPTPP was partly about the economic opportunity – it currently represented 13 per cent of world GDP and would be 16 per cent with the UK.

But is was also about the UK's "Indo Pacific tilt" and the decision to engage and invest a lot more in the region.

"So that means applying to join CPTPP, it means our application for Asean dialogue status, it means the doubling of our diplomatic presence in the South Pacific where we have opened three new High Commissions and of course the deployment of our carrier strike group [the Aircraft Carrier HMS Queen Elizabeth is heading to the South China Seas] - these ships that are coming into the region."

Survey findings

• About 25 per cent of NZ exporters, export to the UK.
• About 23 per cent of NZ importers, import from the UK.
• 35 per cent of NZ importers and exporters think it will be easier for NZ businesses to access opportunities in the UK after Brexit than before Brexit, 31 per cent say no difference, and 21 per cent harder.
• 63 per cent of NZ importers and exporters believe an FTA will have it easier for NZ businesses to access opportunities in the UK, 23 per cent no difference and 6 per cent more difficult.
• Colmar Brunton said the three main reasons respondents thought the UK would be a more appealing trade destination after Brexit was fewer restrictive rules than applied when it was in the EU; having just one country to deal with; and the UK needing to look beyond Europe.

• Colmar Brunton conducted interviews with 605 business decision makers from New Zealand businesses with six or more employees who import or export good and/or services. It used online interviewing of respondents from Colmar Brunton's business research panel and telephone interviewing of respondents from a database of businesses. Interviews were conducted from March 3–23. The margin of error is plus or minus 3.98 per cent.