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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 December 2022, we sold each other $5.3 billion worth of goods and services. We also 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.
NZ$1.5bn Goods exports including meat, wine, fruit, machinery, eggs, honey and wool.
NZ$940m Services exports dominated by travel, transport and business.
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).
Key facts on New Zealand-United Kingdom trade
The UK is New Zealand’s seventh largest trading partner, with two-way trade worth NZ$5.3 billion for the year to December 2022.
New Zealand’s main goods exports to the UK include wine, meat, , fruit, some machinery, eggs, honey and wool – a total of NZ$1.5 billion.
The main goods imports from the UK include vehicles and parts, machinery, equipment, and pharmaceuticals – a total of NZ$1.8 billion.
There is also substantial services trade, worth NZ$2 billion. New Zealand services exports to the UK are dominated by travel, transport and business services.
The United Kingdom is also our closest investment partner in Europe, both as an important source and destination for New Zealand investment.
Our goods trade is highly complementary and we benefit from strengths in different sectors.
- The UK is a leading supplier of vehicles, turbines and engines, and pharmaceutical products to New Zealand.
- The UK is one of the biggest global importers of food products and benefits from New Zealand’s counter-seasonal production of fresh produce and protein.
Once implemented, the NZ-UK FTA will remove:
- prohibitively high tariffs and restricted quota access for key meat and dairy exports
- £10-26 per hectolitre tariff on wine
- 16% tariff on honey
- tariffs of up to 20% on seafood products
- 8% tariffs on onions, kiwifruit and (at certain times of the year) apples.