The UK agrees a free trade agreement with New Zealand

The UK has agreed on a free trade agreement with New Zealand which, it says, will benefit consumers and businesses.

Prime Minister Boris Johnson said the deal will cut costs for exporters and open up the New Zealand job market to UK professionals.

The government hopes it will be a step towards joining a trading club with the likes of Canada and Japan.

But the deal with New Zealand itself is unlikely to stimulate UK growth, according to the government’s own estimates.

Labor and the National Farmers Union (NFU) have said it could harm British farmers and lower food standards.

Overall, only a small fraction of UK trade is done with New Zealand, less than 0.2%.

Mr. Johnson and New Zealand Prime Minister Jacinda Ardern agreed on the deal in a video call Wednesday after 16 months of negotiations.

Tariffs will be removed on UK goods, including clothing, ships and bulldozers, and on New Zealand goods, including wine, honey and kiwifruit.

Professionals like lawyers and architects will be able to work in New Zealand more easily, the government said.

However, the deal is unlikely to boost UK economic growth – or GDP – according to the UK government assessments. New Zealand will fare slightly better as it may be able to sell more lambs in the UK.

But, like the recently concluded trade deal with Australia, the UK hopes this is a step towards joining the Comprehensive and Progressive Transpacific Partnership Agreement (CPTPP), a trade bloc that includes, among others , Australasia, Canada, Mexico and Japan.

The UK already has agreements with many of the members, renewed since it was in the EU. But joining the CPTPP would give it more access in terms of services and digital commerce.

In a video of the agreement concludedJohnson said: “We mixed up, we packed up and together we got the ball over the line and we have a deal. And I think it’s a great deal.”

Ardern said: “I loved your use of rugby metaphors, but if we continued to do so, then of course it would end in the All Blacks victory.

“And I know New Zealand feels that way with this free trade agreement, but it’s actually good for both of us, as it happens.”

However, the NFU said the deal, like the one with Australia, could have a “huge drawback”, especially for UK meat and milk farmers.

Its chairman, Minette Batters, said the deals with Australia and New Zealand mean “we will open our doors to significant extra volumes of imported food – whether or not produced to our high standards – without guaranteeing next to nothing in return for. British farmers “.

“The fact is that UK farms face significantly higher production costs than farmers in New Zealand and Australia, and it’s worth remembering that margins are already tight here due to continued labor shortages and the increase. agricultural costs, “he said.

“The government is now asking British farmers to tiptoe with some of the most export-oriented farmers in the world, without the serious, long-term and properly funded investment in UK agriculture that can enable us to do so.

Emily Thornberry, Labor’s shadow trade secretary, said government data shows that the deal “will reduce employment in our farming communities, produce zero additional growth and generate just £ 112 million in additional exports for UK companies compared to that. at pre-pandemic levels “.

He added that the only winners were “the mega-corporations that run New Zealand’s meat and dairy farms.”

“As our economy recovers from the pandemic, we need trade deals that boost jobs and growth, open up big new markets for UK exporters and support our goals to buy, produce and sell more in Britain. . This trade deal with New Zealand fails in every respect, “he said.

Analysis: Ramzan Karmali, BBC Business reporter

A bottle of New Zealand Sauvignon Blanc could cost 20 pence less due to this trade deal, and other products like Manuka honey and kiwis could also cost less.

In terms of overall trade, even according to the UK government’s own analysis, a tariff free trade agreement will make no difference to the country’s GDP, the total value of goods and services produced by the UK.

Overall trade between the two countries is less than 0.2% of the UK total and in fact in 2018 New Zealand was only ranked as our 53rd largest trading partner.

So why is this agreement important?

The UK signed its first major post-Brexit deal with Japan last year and in June it also signed a draft agreement for a trade deal with Australia.

Both countries, as well as New Zealand, are members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership or CPTPP.

The combined GDP for the 11 nations forming the CPTPP in 2020 was £ 8.4 trillion, one of the main reasons given by the UK government when it was formally applied earlier this year.

This deal is the first agreed during the tenure of the new British Secretary of State for International Trade, Anne-Marie Trevelyan, who took over from Liz Truss last month.

He believes that the UK’s application to the CPTPP will be viewed more favorably by carrying out this agreement.

That said, the trade deal the UK really wants is with the US.

But with the recent change of administration at the White House that seems further away.