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Why has New Zealand negotiated a free trade agreement with the United Kingdom?
The United Kingdom is one of New Zealand’s closest and most important partners. We already have deep economic and people-to-people connections.
In the year to March 2020, we sold each other just over $6 billion worth of goods and services. We have substantial investment and R&D links.
But there is scope for us to do more through a free trade agreement that removes tariffs, addresses non-tariff barriers, and provides improved access for New Zealand services exporters and investors and companies wanting to bid for UK government contracts.
Conclusion of a high quality, comprehensive and inclusive FTA:
- is an important next step in growing New Zealand’s future economic relationship with the UK
- creates new opportunities for New Zealanders to grow their business in the UK
- promotes our sustainable development and inclusive trade objectives to enable the benefits of trade to reach all communities in New Zealand and:
- contributes to New Zealand’s COVID-19 trade recovery strategy.
Benefits to New Zealand
A free trade agreement with the United Kingdom will bring benefits to New Zealand businesses, consumers and communities:
- reducing the costs for existing trade and creating new opportunities to grow our goods and services trade to the UK;
- making it easier for companies of all sizes to do business in the UK, including through digital means;
- establishing a 'level playing field' for New Zealand businesses trading, operating and investing in the UK market; and:
- strengthen collaboration with the UK across a range of trade and economic areas.
Independent economic modelling was commissioned to assess the impact of the NZ-UK FTA. This was undertaken by ImpactECON, which estimated that the effect of the NZ-UK FTA, when fully implemented will be to increase New Zealand’s exports to the UK by 51.3% - 53%, and boost New Zealand’s annual real GDP by between NZ$710 million and NZ$811 million (0.10% - 0.12%) relative to the 2040 modelled baseline. Moreover, the relatively short phase-in periods for most of the goods market access benefits mean the bulk of these economic gains will be realised within the first few years of the Agreement entering into force.
Read the full ImpactECON report [PDF, 545 KB].
ImpactECON’s modelling of the impact of the NZ-UK FTA on New Zealand’s economy is broadly similar to the initial estimate arrived at by the UK Department for International Trade (DIT) in June 2020. This initial UK estimate indicated a New Zealand-UK FTA could lead to an increase in New Zealand exports to the UK by up to 40% and deliver a possible increase to New Zealand’s GDP of some NZ$970 million, as well as an increase of up to 7.3% in United Kingdom exports to New Zealand.
Read the full DIT report(external link).