A major free trade deal between New Zealand and the United Kingdom has been struck, promising zero-tariffs for all New Zealand exports and a $970 million economic boost.
The sweeping “in-principle” deal will entirely remove tariffs on most goods produced in New Zealand, making 63 per cent of current exports tariff-free once a final agreement is settled. Beef and sheep meat exports – one of the most contentious aspects of negotiations – will be tariff-free in 15 years.
The agreement will also significantly open New Zealand up to British contractors and business professionals, raise the threshold for scrutinising UK investments in New Zealand to $200 million, and, notably, the UK has committed to help New Zealand protect the world-famous Ka Mate haka.
“We have achieved really ambitious tariff elimination in some areas that are critical for us ... Cheese, butter, milk powder, areas that matter at an enormous amount to New Zealand, benefit from this trade agreement,” Prime Minister Jacinda Ardern said, when announcing the details of the deal on Thursday.
"Let's not forget wine, honey, onions ... This is a huge deal for New Zealand.”
The UK is currently New Zealand’s seventh-largest trading partner, with two-way trade worth $6 billion in the year to March 2020. Once the deal is signed, it is expected to boost exports by 40 per cent and New Zealand’s gross domestic product by $970 million.
Though some fine print has yet to be hashed out by negotiators, Ardern was confident the substantive aspects of the deal had been settled.
"We've got an agreement in principle here; the deal is done, and so now it's on to concluding their finer parts of that agreement and seeing it come into force next year.”
Among the immediate winners of the deal will be wine and honey exporters, who currently face tariffs of $50 per 100 litres of wine and 16 per cent on honey.
Wine has been New Zealand's largest export to the UK, worth $463.1m a year, and Ardern said the deal would “overnight” remove $14.1m in tariffs a year.
There will also be tariffs removed on wine, honey, onions and hoki for the day the deal is signed. Tariffs on apples and mussels will be removed in three years.
Butter and cheese exports will become tariff-free after five years, with quotas – the maximum volume of exports the UK will accept – increasing for butter from 7000 tonnes to 15,000 tonnes, and for cheese from 24,000 tonnes to 48,000 tonnes.
The quota for beef and sheep meat will progressively increase in the coming 15 years. The beef meat quota will rise from 12,000 tonnes to 60,000 tonnes, and for sheep meat quota, already at 149,205 tonnes, the quota will grow to 164,205 tonnes.