The Free Trade Agreement was signed in London by Damien O'Connor and the UK Secretary of State for International Trade Anne-Marie Trevelyan in February 2022. Photo / Supplied, File
The Free Trade Agreement was signed in London by Damien O'Connor and the UK Secretary of State for International Trade Anne-Marie Trevelyan in February 2022. Photo / Supplied, File
OPINION
Here are seven letters that will boost New Zealand’s economy by up to $1 billion from today: N-Z-U-K-F-T-A.
These are seven letters that will save Kiwi exporters an estimated $37 million in tariffs annually.
Overnight, 99.5 per cent of our current exports to the UK will now enter tariff-freebecause of these seven letters.
Our new free trade agreement (FTA) with the United Kingdom is a gold standard one that businesses can start reaping the rewards of. It is an example of our Government delivering on its economic plan for growth and comes at a time when inflation has peaked and returning to the target range next year.
Negotiated and signed in just 16 months, which is break-neck speed for diplomats, it is a historic deal secured during a time of increasing protectionism abroad.
The benefits of this deal will flow through the economy to all New Zealanders, as one in four jobs depend on exports.
The British love our wine. It is currently our largest export to the UK, earning us around $473 million last year. Wine exporters will save at least $25 million in tariffs each year from today.
The United Kingdom loves the stories behind our wine, coming from such places as this Central Hawkes Bay vineyard beneath the Ruahine Ranges. Photo / Warren Buckland, File
Our honey gets spread over toast every morning from Penzance to Dundee, and our exporters no longer pay $16 for every $100 of product they send to the breakfast tables of Britain.
These kinds of savings are characteristic of what the deal has achieved for our horticulture sector.
The news is also excellent for our dairy and meat producers, who for the past 50 years have been effectively shut out of this high-value market. They’ll now benefit from the significant duty-free quotas before all tariffs are eventually eliminated.
For instance, 7000 tonnes of butter, and 24,000 tonnes of cheese can flow to the UK market tariff-free at commencement. By year five, all dairy trade will be free.
Alongside this, the 12,000 tonnes of tariff-free access for our beef we gain today will grow to 60,000 in year 15, after which trade will be free.
For apples, in the first three years, 20,000 tonnes can go into the UK duty-free during the months of August to December, after which trade will be free. The FTA means apples landing in the UK between January and July will enjoy unhindered access immediately.
Turner and Growers employs 1400 people and is one major exporter of New Zealand apples and kiwifruit. Photo / Nicki Harper, File
But it’s not just about goods crossing borders. Our service sector is set to blossom under this deal. The market access commitments for service exporters and investors are among the best agreed to with any FTA partner. In addition, the UK has committed to extend any market opening in this area that it agrees in future FTAs to New Zealand, ensuring the deal remains future-proofed.
This gold-standard agreement is also a modern one.
This FTA sets high-ambition environmental commitments and is our first bilateral trade deal to include specific provisions on climate change. The United Kingdom has agreed to take concrete steps to eliminate subsidies on fossil fuels. New prohibitions agreed to combat over-fishing, something New Zealand has been continually campaigning on internationally.
Our Government has delivered on trade.
Damien O'Connor. Photo / Supplied
Since 2017 we’ve brought in four new FTAs in the form of the UK agreement, our new deal with the European Union, CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership), and RCEP (Regional Comprehensive Economic Partnership). We’ve also upgraded our FTAs with China, Singapore, and the ASEAN member states. Underpinning this is our work supporting a robust international rules-based trading system.
As a result of these deals, free trade agreements will cover 73.5 per cent of our exports. In 2017 that figure was 52.5 per cent. We’re opening doors for exporters and our opportunities are diversifying.
When the UK entered the European Union market in the 1970s and New Zealand lost a key market, I was a young fella on a West Coast dairy farm. I would never have thought, 50 years later, I’d be in London negotiating a free trade deal to open up that same market for our farmers, growers and, of course, the broader economy.
I’d hasten to add though, this is not about me. There’s been a fantastic team of negotiators who have worked incredibly hard and long hours to get us to this point. And it should be pointed out that much of this was done via Zoom calls, often in the middle of the night and in the midst of a pandemic.
The pace of progress is a credit to all involved and what’s pleasing is that it’s not come at the sacrifice of quality. This is a very, very good deal for New Zealand.
Wednesday, May 31 2023 is a day when our future gets just that bit brighter.
- Damien O’Connor is New Zealand’s Trade and Export Growth Minister.
