Thursday, December 7, 2023

Historic UK-NZ free trade pact ratified

Neal Wallace
Bonanza for meat, dairy, wine, honey and more with $3 trillion market easier to access from May 31.
Reading Time: 2 minutes

The ratification overnight of New Zealand’s free trade agreement with the United Kingdom provides meat and dairy exporters with a level of access to the $3 trillion market last enjoyed before the UK joined the European Union in 1973.

The agreement, which comes into force on May 31, means 99.5% of current trade will enter the UK duty-free through combination of tariff elimination and duty-free quotas.

Improved dairy access will be phased-in and completed in January 1 2028.

Announcing the ratification, Prime Minister Chris Hipkins said it will save exporters about $37m a year from eliminated tariffs and eventually add about $1billion a year to NZ’s economy.

“This is a gold-standard FTA, reflecting the close relationship between our two countries,” Hipkins said.

Trade Minister Damien O’Connor said the wine industry, which last year exported about $470m to the UK, will be a major benefactor, saving about $25m year from tariffs.

A 20% tariff on seafood and 16% for honey are also removed.

O’Connor said dairy and red meat sectors will have significantly improved access 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 5 and 15 respectively.

Meat Industry Association CEO Sirma Karapeeva described the agreement as the most significant development since the UK joined the EU in 1973.

“It really opens up an opportunity for New Zealand’s beef exports in a traditional market and creates new avenues for growth for the red meat sector,” she said.

Benefits for the New Zealand dairy sector will take longer but the ratification of the FTA has been welcomed by the Dairy Companies Association of NZ.

Executive director Kimberly Crewther said from January 1 2028 NZ exporters will have a level playing field with European competitors.

She said the UK is a high-value dairy market with discerning customers and consumers who value NZ provenance, sustainability and safety credentials. The UK is the world’s second-largest dairy import market after China, but tariff disadvantages have limited NZ to supplying just 0.1% of the approximately $8bn worth of dairy products the UK imported in 2022.

From May 31, tariffs will be eliminated on a range of products, including liquid milk and cream, yogurt, buttermilk powder and infant formula.

The phasing-out of tariffs on milk powder, lactose, whey and other dairy proteins will be completed on January 1 2026, and the tariff phase-out on cheese and butter will be completed on January 1 2028.

Apiculture New Zealand chief executive Karin Kos said the UK is currently one of NZ’s top three export markets, worth around $40m in 2022, but the 16% tariff has been a significant barrier.

“This deal will give New Zealand beekeepers and honey exporters a real boost at a time when it is much needed and provides a platform to grow the UK market to the benefit of all parties.”

ExportNZ Senior Policy Advisor Josh Tan said the FTA is a comprehensive and modern agreement that will deepen the NZ-UK economic relationship.

“With this agreement, as well as the UK’s accession to the CPTPP [Comprehensive and Progressive Agreement for Trans-Pacific Partnership] agreement, the NZ-UK economic relationship will flourish over the coming years.”

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