Tuesday, December 5, 2023

Boost for trade as NZ signs EU FTA in Brussels

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Deal brings three times the immediate tariff relief UK FTA delivered on day one.
There will be immediate tariff relief for kiwifruit, wine, onions, apples, mānuka honey and manufactured goods.
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New Zealand’s ground-breaking Free Trade Agreement with the European Union should see the country’s exports boosted annually by $1.8 billion within the next 12 years, Prime Minister Chris Hipkins says.

The agreement was signed in Brussels by Minister for Trade and Export Growth Damien O’Connor and the EU Executive Vice President and Trade Commissioner Valdis Dombrovskis, witnessed by Hipkins and EU President Ursula von der Leyen. 

“Tariff savings on New Zealand exports are $100 million from day one of the agreement entering into force, the highest immediate tariff saving delivered by any New Zealand FTA. That’s around three times the immediate savings from the UK FTA,” Hipkins said.

Between this and the United Kingdom FTA, NZ will save around $150m annually in export tariffs as well as adding billions to the country’s GDP. 

NZ’s exports to the EU should gain  $1.8bn per year by 2035, he said.

There will be immediate tariff relief for  kiwifruit, wine, onions, apples, mānuka honey and manufactured goods. It will also apply to most seafood, and other horticultural products.

While tariffs remain on many meat and dairy products, there will be improved export access. According to the government, red meat and dairy will get up to $120m worth of new annual export revenue, estimated to reach $600m by 2030. Quotas have been established for butter, cheese, milk powders and protein whey. 

Export NZ executive director Josh Tan said the FTA opens up a market for goods previously obstructed by tariffs on NZ products.

“The winning sectors on the day are the likes of horticulture, seafood, wine, and honey, who will be delighted with the outcomes. Our two largest goods export sectors, red meat and diary, however, would have been hoping for more commercially meaningful outcomes for their exports.

“Unfortunately the EU has not backed its own farmers to be competitive with meat and dairy farmers in New Zealand, and has maintained tariff protection for them. This is not only to the detriment of NZ exporters from our meat and dairy sectors, but it means that EU consumers will be paying more for our high quality, sustainably produced food.”

Tan acknowledged the hard work NZ’s negotiators put into securing the deal.

O’Connor said the FTA will cut costs and support exporters to grow and diversify their trade. 

“This new access will help to accelerate our post-covid recovery, while providing a boost to our regions as they grapple with the longer-term effects of Cyclone Gabrielle,”  O’Connor said.

Based on current trade figures, NZ will have the opportunity to provide up to 60% of the EU’s butter imports – up from 14% today. NZ cheeses could also make up 15% of the EU’s imported cheeses, up from 0.5%, he said.

The FTA contains another important “EU first”– a Māori Trade and Economic Co-operation chapter that will create a platform for greater engagement with the EU on Māori economic and trade interests.

 The deal has been welcomed by many in the sector.

“We are thrilled that the agreement also includes the definition of mānuka and a separate tariff recognising the inherent distinctiveness of mānuka as a taonga species exclusively from Aotearoa New Zealand,” Apiculture NZ chief executive Karin Kos said.

“The EU’s recognition of mānuka as a taonga species is significant in helping progress the next step in securing geographical indications for mānuka honey, an initiative that is strongly supported by both industry and iwi.”

NZ’s honey exports to the EU have grown in recent years to around $60m per year.

The New Zealand onion industry said the elimination of tariffs costing over $6m annually on onion exports will address barriers to trade.

“The EU is the No 1 market for New Zealand onion exports. Tariff savings of 9.6% puts the New Zealand onion industry on a level footing with competitors such as Chile and South Africa,” Onions NZ chief executive James Kuperus said.

In the year to March 2023, NZ exported $143m worth of onions to 45 countries, and the sector employed 1050 people. 

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