Never mind the promised $1 billion bump to GDP in today’s agreement with the UK, the removal of tariffs and improved working holidays will be worth even more, says a former NZ negotiator
- UK to eliminate all tariffs on NZ exports, with 97 percent removed on day one
- NZ exporters to save $37.8m a year on tariff elimination
- Increased access for beef and sheep meat
Analysis: If you had told me 10 years ago that New Zealand would on 21 October 2021 announce agreement in principle on a comprehensive high quality free trade agreement with the UK, and that agreement, over time, would lead to full free trade in beef, lamb and dairy products, I would have asked what you had been smoking or drinking.
For a start, the UK was part of the European Union and was therefore unable to negotiate UK-only free trade agreements. This meant that since the early 1970s it had been living behind a major protectionist wall and with huge subsidies for agriculture producers. It would seem that it would take more than 10 years to fundamentally change the UK agricultural model.
Well, today the free trade agreement has happened, with Jacinda Ardern and Boris Johnson reaching agreement in principle on a deal that liberalises all goods, makes services trade and investment rules more liberal and which addresses issues such as digital trade, environmental sustainability, climate change and how to make trade more meaningful for Māori.
It would have been good to see more progress on an expanded working holiday scheme … Expect a much improved scheme to be negotiated separately over the next few weeks.
We have to wait 15 years for some of the more sensitive agriculture products to reach full free trade but that will be worth the wait. Beef, lamb and dairy products will enjoy progressively larger duty free access to the UK from year one. Ninety-seven percent of New Zealand’s existing exports go duty free on entry into force.
We don’t know the detail of the indigenous chapter. This is part of the detail that has still to be finalised, but it sounds as though the ambition for this chapter is greater than with Taiwan – the only other free trade agreement that has such a chapter.
All up, the Government is claiming that the agreement will boost New Zealand’s GDP by $1 billion. I am sceptical of such claims – usually high quality agreements such as this deliver far greater impacts than it is possible to model.
The intellectual property agreement is interesting. New Zealand has agreed to extend the copyright term for authors, performers and producers by 20 years. This will make it easier for New Zealand to meet US demands, should the US seek to rejoin the big Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
And the geographic indications area appears to be moving New Zealand closer to what the European Union is demanding in the trade deal we are negotiating with them.
If I were to quibble I would like to see more mutual recognition in this agreement. New Zealand and UK regulators have great confidence in each other. Our legal systems are very similar and we have huge cross-overs in education.
Maybe this can be something we work on over the next few years. Short-term, this is great news for lawyers and architects.
We want it to enter into force as quickly as possible. Unfortunately I doubt this will be ready for signature during any Prime Ministerial visit to the UK later this year (this visit may or may not happen).
It would have been good to see more progress on an expanded working holiday scheme. But with India and others about to negotiate with the UK, I can understand why the UK was wanting to separate this from our trade deal. Expect a much improved scheme to be negotiated separately over the next few weeks.
The Prime Minister and Damien O’Connor and the negotiating team need full credit for what has been achieved so far, and it is great that Boris Johnson and his Government are prepared to deliver on their free trade rhetoric.
There is still hard work ahead for our negotiators and trade lawyers over the next few weeks to get this agreement finalised and signed late this year or early next. We want it to enter into force as quickly as possible. Unfortunately I doubt this will be ready for signature during any Prime Ministerial visit to the UK later this year (this visit may or may not happen).
This agreement is also another hurdle removed from UK membership of the CPTPP. Let’s hope that membership can be finalised by the middle of next year.
Having the world’s fifth-largest economy part of CPTPP adds considerable credibility and heft to that important agreement.