AANZFTA is a free trade agreement between the Association of South East Asian Nations (ASEAN), Australia and New Zealand.
AANZFTA is an agreement between ASEAN member states; Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, Viet Nam and the Philippines; and New Zealand and Australia.
The number of countries involved in AANZFTA makes this agreement New Zealand's largest plurilateral free trade agreement and a key building block in developing our relationship with South East Asia.
ASEAN is an economic market with enormous potential for New Zealand businesses and investment. As of 2018, ASEAN has a regional population of almost 650 million and a GDP of US $2.9 trillion.
ASEAN is New Zealand’s fifth-largest trading partner after China, Australia, the EU and the USA. In 2017, New Zealand exported $4,963 million worth of goods to the ASEAN region, accounting for almost 10% of New Zealand’s total goods exports.
Benefits of AANZFTA
AANZFTA has played a significant role in growing New Zealand trade in the ASEAN region. Since AANZFTA was implemented in 2010, two-way trade between New Zealand and ASEAN has grown by almost 30% - an increase of more than $6 billion.
Goods exports to ASEAN alone have grown by over 40% since 2012, making ASEAN our third-largest export destination for goods following Australia and China. In addition, service exports to ASEAN almost doubled between 2012 and 2018 from $866 million to $1.6 billion.
AANZFTA has also enabled us to open our markets and grow our trade to six countries where we do not have bilateral free trade agreements - most notably Indonesia, Philippines and Viet Nam, but also Myanmar, Brunei and Laos.
Origins of AANZFTA
AANZFTA was the first plurilateral free trade agreement negotiation embarked upon by New Zealand and Australia as a joint party. It was also the first time ASEAN embarked on comprehensive free trade agreement negotiations that covered all sectors simultaneously.
AANZFTA orginated out of the desire to explore a link between the ASEAN Free Trade Area (AFTA) and the Australia-New Zealand Closer Economic Relations Trade Agreement (CER). This resulted in the AFTA-CER Closer Economic Partnership (CEP) Agreement. This agreement primarily sought to deepen economic integration through a work program focused on trade facilitation and capacity building, but offered little comprehensive trade coverage.
In 2004, leaders announced their decision to launch formal AANZFTA negotiations. The subsequent negotiations concluded in 2008, with AANZFTA entering into force for New Zealand in 2010 and for all remaining parties in Janaury 2012. Although AANZFTA negotiations were conducted between Australia, New Zealand and ASEAN as an entity, the completed free trade agreement resulted in separate market access commitments for Australia, New Zealand and each of the ten ASEAN member countries.
At the same time as negotiating AANZFTA, New Zealand successfully concluded bilateral free trade agreement negotiations with Thailand (2005) and Malaysia (2010). More recently, New Zealand has also been successful in concluding and ratifying the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), which also includes Viet Nam, Singapore, Brunei Darussalam, Malaysia and Australia.
All of these free trade agreements now operate simultaneously with AANZFTA, in addition to the Singapore Closer Economic Partnership (2000).
AANZFTA in action
Watch a short clip from the AANZFTA Joint Commission in Auckland 2017. New Zealand is due to host the Joint Commission again in 2020.
AANZFTA has provided significant benefits for New Zealand exporters across a range of sectors. By 2020, tariffs on 99 percent of New Zealand’s exprts to Indonesia, Malaysia, the Philippines and Viet Nam will be removed. This includes the elimination of tariffs on New Zealand dairy, beef, forestry, apples and kiwifruit exports. Based on the level of trade when AANZFTA was signed, this will equate to an annual duty saving of approximately $50 million.
AANZFTA has further liberalised market access for New Zealand goods through Rules of Origin that allow for ‘cumulation’. This means that New Zealand goods used in the manufacture of products in ASEAN countries or Australia are considered local content, making New Zealand products an attractive supply option for businesses trading in the region.
AANZFTA provides improved opportunities and greater access for New Zealand service providers in the region, particularly in the education sector. AANZFTA also includes commitments to ensure greater streamlined and transparent procedures for immigration applications and processes for business people working in the ASEAN region.
AANZFTA supports investment in the ASEAN region by ensuring better protection and security through a range of investment protection disciplines and a provision to recourse to binding investor-state arbitration procedures.
Alongside the free trade agreement, New Zealand has entered into arrangements with the Philippines and Viet Nam to allow temporary employment entry into New Zealand. New Zealand has since implemented a Working Holiday Scheme with both countries.
Every time the New Zealand government signs a new international treaty, a National Interest Analysis (NIA) is produced by the lead government agency. The NIA is then presented to Parliament, together with the text of the treaty for consideration.
The current NIA, completed in 2010, is available here [PDF, 747 KB].
Once upgrade negotiations have concluded, another NIA will be undertaken to assess the impact of the upgrade on New Zealand and New Zealanders.