Producers of key New Zealand exports such as kiwifruit and Mānuka honey are expecting to be able increase exports to the EU by up to $1.8bn a year thanks to a trade deal with the union while NZ will also gain more flexible supply chains.
The lifting of tariffs due to the free-trade agreement (FTA) with the EU is expected to particularly benefit produce such as kiwifruit, Mānuka honey, fish and seafood, onions, wine and industrial products.
New quotas for beef, sheep meat, butter and cheese are also expected to be worth hundreds of millions of dollars per year for exporters if they can meet demand.
The deal between New Zealand and its fourth-largest trading partner will see duties removed on 91% of New Zealand’s goods exports to the EU from entry. This will rise to 97% after seven years.
It is likely to come into force in the first half of 2024 and is expected to lead to an uptick in imports from the EU of footwear, apparel, cosmetics, furniture, chocolate, kitchen appliances, machinery and agricultural goods. The increased imports will boost NZ supply chain resilience and lower costs of imported goods, ministers said.
The deal comes hot on the heels of a free trade agreement with the UK, signed in May. However, prime minister Chris Hipkins said the savings resulting from the EU deal were likely to be around three times those of the agrreement with the UK.
“The EU FTA will increase our exports to the EU by up to $1.8bn per year by 2035,” Hipkins said.
“Tariff savings on New Zealand exports are $100m from day one of the agreement entering into force, the highest immediate tariff saving delivered by any New Zealand FTA.”
Hipkins said that along with the UK FTA, the deal will save around $150m annually in tariffs on our exports as well, as adding billions every year to New Zealand’s GDP.
Trade and export growth minister Damien O’Connor said the NZ-EU free trade agreement would cut costs for exporters.
“Based on current trade figures, New Zealand will have the opportunity through combined FTA and WTO quotas to provide up to 60% of the EU’s butter imports – up from 14% today,” he said.
“New Zealand cheeses could also make up 15% of the EU’s imported cheeses, up from 0.5% today, which is no mean feat for a small nation like ours.”
O’Connor said that the FTA could also help NZ farmers account for up to 96% of EU sheep meat imports.
The deal also covers areas such as climate change, labour rights, women’s economic empowerment, environmentally harmful fisheries and fossil-fuel subsidies.
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