New Zealand-European Union FTA
New Zealand and the European Union have announced their agreement to start the process for Free Trade Agreement negotiations.
The European Union is the world’s largest economic entity with total GDP of around US$18 trillion and some 500 million consumers. It’s also the world’s largest trading entity, accounting for 16.5% of global trade (goods and services) in 2014, as well as generating more than a quarter of global spending on research and development.
New Zealand and the EU have a long-standing and close relationship, cemented in the recently-concluded Partnership Agreement on Relations and Cooperation. We agreed on 29 October 2015 to begin working towards a deep, comprehensive and high-quality FTA.
Why it’s a priority for New Zealand
The EU is New Zealand’s third-largest trading partner, with two-way trade valued at $19.6 billion in goods and services in the year to June 2015. This comprises over $8 billion in exports ($4.9 billion goods, $3.1 billion services), and $11.5 billion in imports ($8.5 billion goods, $2.9 billion services).
The EU is our second-largest source of foreign direct investment in New Zealand (NZ$10.9 billion) and third-largest destination for New Zealand direct investment abroad (NZ$2.89 billion). Nearly 40% of all New Zealand international research collaboration is with EU partners.
Our trade arrangements with the EU were last set nearly 30 years ago, during the Uruguay Round of multilateral trade negotiations in the WTO. Since then, both the EU and New Zealand have had active FTA agendas. As a result, New Zealand is now one of only six WTO members without an EU FTA in place or under negotiation. This puts New Zealand at a competitive disadvantage in the EU market. Similarly, the EU is the only one of New Zealand’s top ten trading partners without an FTA in progress.
What are the potential benefits?
An FTA with the EU would:
- establish a modern, comprehensive foundation to grow economic and trade opportunities in areas ranging from primary products to capital equipment, manufactured goods, services, innovation and investment
- level the playing field for New Zealand companies in the EU market and vice versa
- safe guard a diversified range of markets and sources of investment for New Zealand
Possible areas of negotiation
This will be the subject of discussion as part of the first step of the process described above. Both the EU and New Zealand have, however, concluded a number of previous FTAs which provide useful background as to the kind of areas for negotiation likely to form part of this discussion.
Among the most recent of the EU’s FTAs are those concluded with Viet Nam (2015), Canada and Singapore (2014) and Korea (2011). Information regarding these FTAs can be found on European Commission website
More information on recently concluded New Zealand FTAs is also available.
Timing for the negotiations
For the EU, there are several steps that need to be completed before negotiations can commence. These are expected to take around 12-18 months. These steps include
- joint discussions to define the scope and overall approach to the negotiations
- an impact assessment
- processes to develop and approve a set of negotiating directives.
Discussions on scope and overall approach will begin as soon as possible, with work on the other steps carried out in parallel.
Given the 12-18 month period required, negotiations are likely to start in the first half of 2017.
How to get involved
MFAT is keen to hear from those with an interest in the FTA negotiations, including businesses, NGOs, Māori and members of the public.
We would like to hear from companies engaged in trade or investment with the EU now, and also those with an interest in doing so in the future. We are particularly interested to hear about specific issues impeding the growth or development of trade and investment links with the EU.
To provide input or for more information about the EU FTA process, please email firstname.lastname@example.org or write to: Coordinator, EU FTA Ministry of Foreign Affairs and Trade Private Bag 18-901 Wellington
In December 2015, MFAT called for public submissions on the proposed FTA between New Zealand and the European Union. The submissions process ran until March 2016.
The submissions will help to provide input into New Zealand’s approach to the preparatory discussions outlined above. This input will also help to shape New Zealand’s negotiating mandate as it enters into subsequent negotiations.
Twenty-four submissions were received. They can be viewed in full here: Public submissions received
This forms the first step in an on-going programme of consultations and outreach planned for the period leading up to the commencement of negotiations.