NZ's Free Trade Agreement with the United Kingdom fast-tracked, Ed Sheeran victorious in copyright case and London all set for Coronation weekend in the latest New Zealand Herald headlines. Video / NZ Herald
New Zealand’s Free Trade Agreement (FTA) with the UK will come into force at the end of this month, Prime Minister Chris Hipkins and his counterpart Rishi Sunak have announced ahead of a visit to Downing St.
Hipkins, who is in the UK for the coronation of King Charles III,described the deal as “gold-standard”.
“From day one New Zealand exporters will save approximately $37 million per year in tariff elimination alone, so the earlier-than-expected entry into force is a much-needed boost for our exporters right now,” Hipkins said.
“Securing improved trade access for New Zealand exporters is a foreign policy priority for me so it is incredibly pleasing to get the final leg of this FTA over the line and for our exporters to start benefiting from it by the end of this month.”
Sunak said the deal marked “a new chapter in the great friendship between our two countries”.
“This deal will unlock new opportunities for businesses and investors across New Zealand and the UK, drive growth, boost jobs, and most importantly build a more prosperous future for the next generation,” he said.
British Prime Minister Rishi Sunak met with NZ Prime Minister Chris Hipkins at 10 Downing St. Photo / AP
The New Zealand Government said the start day has been brought forward, although both Parliaments need to ratify it first. The Ministry of Foreign Affairs and Trade had earlier indicated the deal would enter into force in the first half of this year.
Negotiations wrapped up at the end of 2021 but the finishing touches and ratification have dragged on until now.
The agreement delivers some of the best terms negotiated by New Zealand in an FTA. New Zealand could not negotiate a separate trade agreement with the UK when it was part of the European Union as trade deals were handled at the EU level. After Brexit, the UK was keen to ink new trade agreements with longstanding trading partners and to accede to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), of which New Zealand is a member.
These two elements combined to give New Zealand a strong position in negotiations.
Trade Minister Damien O’Connor said the agreement is expected to boost New Zealand’s GDP by up to $1 billion, and expand New Zealand’s goods exports to the UK by over 50 per cent.
“From day one 99.5 per cent of current exports will enter the UK duty-free through a combination of tariff elimination and duty-free quotas,” O’Connor said.
“This deal will cut costs for exporters, create opportunities for New Zealand businesses to grow and diversify their trade, and help tackle rising living costs by delivering quality, price-competitive UK imports.”
O’Connor said the FTA is “great news for our wine industry”, which is currently our biggest exporter to the UK by value earning around $470m last year.
“The deal saves exporters at least $25m in tariffs immediately. The deal also removes tariffs of up to 20 per cent on seafood products.
“Major honey exporting regions like Northland, Hawke’s Bay, and the Coromandel will benefit from the removal of the $16 per $100 of product sent to market.
“Our dairy and red meat sectors will have significantly improved access to the UK’s $3 trillion consumer market for the first time in nearly 50 years. We’ve secured excellent tariff-free quotas for our dairy and meat producers, which will grow until being fully liberalised by years five and 15 respectively,” he said.
Exporters and businesses now have three and a half weeks to prepare for the entry into force date. For some sectors, this will include quota administration.
Prime Minister Chris Hipkins is in London for the coronation of King Charles III. Photo / Getty Images
The Working Holiday Scheme that allows young people from the UK and New Zealand to live and work in each others’ countries has also been upgraded. This will take effect on July 1 this year.
The programme will mean the age of eligibility is lifted from 30 to 35 years, and the length of the visa extended from two years to three.
In July 2022, an extension of the programme was announced, which would see five years added to the age of eligibility for both schemes from 30 to 35 years; an extension of the maximum period of time individuals can stay in New Zealand and the UK from two years (or 23 months in the case of New Zealand) to three years; and an extension to the length of time individuals can work, allowing those in the UK and New Zealand to work for the full duration of their three-year stay.
Hipkins said the changes, which were announced earlier, will have an impact on labour shortages.
“There are around 3500 working holidaymakers from the UK in New Zealand at the moment and are making a big difference to sectors looking to fill workforce gaps,” Hipkins said.
