The last significant remaining obstacle to New Zealand’s free trade agreement with the United Kingdom entering into force has been cleared.
The Trade (Australia and NZ) 2023 Bill received Royal Assent last Friday after being passed by both houses of the UK parliament.
Members of Parliament in New Zealand passed legislation ratifying the agreement in November last year.
Dairy Companies Association executive director Kimberly Crewther said the finish line was close for exporters eager for expanded access to the UK market.
“There are a couple more processes the UK needs to get through before implementation but it should be fairly close … mid-year hopefully.
“There are some odd things that happen in the UK around them not being able to do certain things around the time of the coronation [of King Charles], which impacts the timing a bit but it is within sight with both those bills having been passed, at our end and now at their end.”
After the agreement was concluded in February last year Trade Minister Damien O’Connor declared it the best for NZ exporters since the 2008 deal with China, which ushered in a boom in trade between the two countries.
Officials have estimated the UK deal will result in annual tariff savings of $38 million based on current trade volumes. Realistically the savings will be significantly more, given the fact that current high tariffs effectively stop trade in products such as dairy and beef. These should flow much more freely once the deal enters into force.
Meat exporter ANZCO’s general manager of sales, Rick Walker, said NZ’s annual beef quota rises substantially from 450t now to 12,000t tariff-free in the first year, and in equal annual instalments to 60,000t within 15 years, after which quotas fall away completely.
“Our focus over the last 12 months has been to work with food service distributors to get product into the market to sample and get a better feel for.
“The feedback in general has been positive.”
However the market will not be without its challenges for meat exporters, Walker said.
Australia’s own free trade agreement with the UK, which enters into force at the same time as NZ’s, has created a significant amount of new sheep meat quota for its exporters.
“We have definitely seen Australia be far more active over the past 12 months with customers in the UK and preparing for a meaningful increase in their quota access.
“One of the big challenges we are going see is a more competitive environment [for sheep meat].
“We have had that market to ourselves and now we don’t.
“We will have to face that challenge head-on,” Walker said.
Beef and Lamb NZ’s general manager for market development Nick Beeby said Australia will back its exporters’ push into the UK with significant promotional spending.
“We know that they are preparing to spend more in the UK than they ever have before.”
Beeby said the NZ industry is considering how it can respond with its own promotions, although it is certain to be considerably outgunned by Australia’s budgets.