Dear Colleagues,
Update on negotiations on the UK’s future trading relationship with New Zealand: Agreement in principle
On 20 October 2021, the Government agreed the main details of a trade deal between the UK and New Zealand. Our like-minded democracies could not be closer through our shared history and values. We are united in our fundamental belief that the best way forward firmly lies in free trade, underpinned by high standards and the rule of law. This is the second free trade agreement negotiated from scratch since the UK left the European Union and, alongside the recent Agreement in Principle reached with Australia, contributes to the UK’s ambitions in the fast-growing Asia-Pacific region and sets a precedent for future high-standard free trade agreements.
This agreement will:
• Increase opportunities for UK businesses - UK exporters will no longer have to pay tariffs on any goods. This means they can do business at lower costs and gain an advantage over international rivals in the New Zealand import market, a market which is expected to grow by around 30% by 2030. Red tape will be cut for businesses who export goods to New Zealand, including 6,200 UK SMEs, and open up opportunities for more small businesses to grow their customer base abroad. The free flow of trusted data, which is essential for modern businesses, will be guaranteed between the UK and New Zealand – making it easier for UK businesses trading digitally to break into the New Zealand market.
• Bring benefits for consumers - Removing tariffs will make high-quality products from New Zealand that British consumers love more affordable, including Marlborough Sauvignon Blanc, Manuka Honey, and kiwi fruit. We have also agreed a Consumer Protection chapter – the first of its kind in the UK’s independent trade deals - which will help businesses and consumers trade with confidence.
• Support workers across the country – 245,000 people worked for SMEs exporting to New Zealand in 2019 and lowering trade and investment barriers through this deal will boost exports and support jobs across the country. Brits will also be able to work more freely in New Zealand thanks to unprecedented new commitments that allow UK service suppliers to deliver contracts. Family members will also be able to join long term company transferees in New Zealand.
• Allow British Farmers to thrive with a New Zealand Deal - This deal will remove tariffs on all UK food and drink exports to New Zealand, opening up opportunities for British farmers. A deal with New Zealand is also a gateway to joining the Comprehensive and Progressive Agreement on Trans-Pacific Partnership - a huge free trade area of 11 Pacific nations. Joining CPTPP will mean more opportunities for British exports to those high growth markets - demand for beef and lamb is increasing in the Asian market, and CPTPP countries are estimated to account for 21% of global meat imports in 2030. This deal will not undercut farmers, and we have ensured there will be protections for the industry, including staged tariff liberalisation to allow farmers sufficient time to adapt, as well as a general bilateral safeguard mechanism. Throughout negotiations, we have remained in close contact with businesses, farmers, and other stakeholders.
The Governments of New Zealand and the United Kingdom now intend to finalise the text before signature and the subsequent entry into force of the deal. Once signed, the deal will be presented to Parliament and published on GOV.UK, alongside an independently scrutinised impact assessment. The deal will receive full Parliamentary scrutiny, and the Trade and Agriculture Commission will also play a full role, providing expert and independent advice from signature stage. The full signature of a finalised Free Trade Agreement will take place at a future date, with the full scrutiny process to step up once final text has been agreed upon. I have attached the following document: “FTA Negotiations: agreement in principle”, which has been published online, alongside an explainer. I will be placing copies of both documents in the libraries of the House.
