The agreement will see NZ drop all duties next year, while Britain will take 15 years to completely lift tariffs on NZ exports. Leaders also pledged an extension to working holiday arrangements. Justin Giovannetti reports from parliament.
Tariffs on exports of New Zealand cheese, beef and lamb to the United Kingdom will be reduced over the coming 15 years under the terms of a free trade deal unveiled this morning.
The NZ-UK agreement-in-principle follows a similar deal struck earlier this year between London and Australia as prime minister Boris Johnson has gone hunting for free trade agreements following Britain’s withdrawal from the European Union. In exchange for an eventual easing of trade restrictions between the two countries, both sides have committed to supporting actions to combat climate change and the UK will recognise the importance of the Treaty of Waitangi in trade.
The early terms of the deal require New Zealand to drop all restrictions and duties on British products the day the deal comes into force. In response, the UK will simultaneously drop its tariffs on 63% of the products it imports from New Zealand.
The announcement emphasised that on the day the deal enters force, 96.7% of “tariff lines” will be removed by the UK. A tariff line represents a single type of good and not the value of the exports, however. Within the 3.3% of products not made restriction free on day one are one-third of all exports from New Zealand producers. The “tariff lines” not covered immediately by the deal also include the exports that are expected to grow quickly once restrictions eventually are relaxed, including milk powder, cheese, beef and sheep meat.
Tariffs will be relaxed on New Zealand honey and wine immediately, while apples will follow after three years. Butter and cheese will need five years for a full open market, while restrictions on exports of beef and sheep to the UK will be phased out over 15 years. Quotas will remain on meat exports over the next decade. After 15 years, the deal is expected to permanently increase the size of New Zealand’s economy by $1 billion.
“This is a historic and substantial deal and it has been achieved, basically, in a year. That has never been done before so I’m proud of the efforts of our team,” Jacinda Ardern said at the Beehive this morning. The prime minister added that Johnson had expressed his interest in tariff-free New Zealand wine while the two spoke yesterday. Trade minister Damien O’Connor joined her via Zoom from managed-isolation after his second trip to Europe to work on the agreement.
The trade minister said New Zealanders should expect cheaper British gin, chocolate and motorhomes after the deal is signed. Cars and clothing are some of the more valuable items the UK sends here. He said the deal should overcome resistance from farmers in the UK. “There’s been some wariness and a little paranoia from farmers over there,” according to O’Connor.
In video released by Downing Street, Johnson trumpeted “a big moment for the UK and our partnership with New Zealand”. He added: “We’re absolutely thrilled that we seem to have driven for the line, we’ve scrummed down, we’ve packed tight and together we’ve got the ball over the line, and we have a deal.”
Ardern responded, in keeping with the metaphor: “Unlike in a rugby match I think we can both literally come off the field feeling like winners on this occasion.”
The final text of the agreement needs to be negotiated and will be completed “next year”, according to the prime minister. Alongside the trade deal, both countries have also pledged to extend working holiday arrangements. “These changes will improve the access that young New Zealanders will have in the years to come to live and work in the UK,” Ardern said. The prime minister lived in the UK under the scheme when she was younger, so she has a personal interest in the outcome.
Current trade between both countries is about $6 billion annually. New Zealand sells $1.4 billion to the UK every year, while the British send $1.7 billion worth of goods this way. The rest of the trade is in services.
In exchange for the deal, New Zealand’s intellectual property laws will be opened up, increasing the length of a copyright term to 70 years–it currently sits at 50 years. The types of rights given to performers will also be extended.
The passage on Te Tiriti o Waitangi includes a commitment to develop “an indigenous trade chapter” that will include “recognising the value of Māori leadership and economy, Mātauranga Māori and the Te Ao Māori worldview” and a commitment from the UK work with New Zealand to “identify appropriate ways to advance recognition and protection of the haka Ka Mate.” It adds: “Separately, a side letter will also acknowledge Ngāti Toa Rangatira’s guardianship of the Haka Ka Mate.”
Preliminary discussions on trade arrangements began while the UK was in the midst of Brexit negotiations.
The full text of the agreement in principle can be viewed here.