The EU has completed political procedures ratifying the ambitious free trade agreement (FTA) with New Zealand today. The decision by the Council of the European Union comes less than a week after the European Parliament gave its consent.
The deal will reduce duties for EU companies by some €140 million a year. Consequently, bilateral trade would grow by up to 30% within a decade, with EU exports growing by up to €4.5 billion annually. Also, EU investment in New Zealand is expected to grow by up to 80%.
This landmark agreement includes unprecedented sustainability commitments, including respect for the Paris Climate Agreement and core labour rights.
Trade agreements form part of the EU’s open trade – or ‘partnering’ – approach, one of the three goals of the European Economic Security Strategy presented in June. This Agreement also strengthens the EU’s engagement in the strategically and economically crucial Indo-Pacific region.
“New Zealand is a key partner for us in the Indo-Pacific region, and this ambitious free trade agreement will bring us even closer together,” Ursula von der Leyen, President of the European Commission, said. “The deal will bring major opportunities for EU companies, with exports expected to grow by up to €4.5 billion annually. But this is not all: thanks to unprecedented social and climate commitments, our consumers and environment will also reap the benefits. This is how the EU achieves positive results at global level – by working in cooperation with our partners.”
New export opportunities
The EU-New Zealand FTA will provide new opportunities for businesses. It will eliminate all tariffs on EU exports to New Zealand, open the New Zealand services market in critical sectors such as financial services, telecommunications, maritime transport and delivery services, and ensure non-discriminatory treatment to EU investors in New Zealand and vice versa. The Agreement will also improve access for EU companies to New Zealand government procurement contracts for goods, services, works and works concessions, facilitate data flows, predictable and transparent rules for digital trade and a secure online environment for consumers, prevent unjustified data localisation requirements and maintaining high standards of personal data protection.
The Agreement’s benefits include helping small businesses export more through a dedicated chapter on small and medium enterprises, significantly reducing compliance requirements and procedures to allow for quicker flow of goods, and significant commitments by New Zealand to protect and enforce intellectual property rights, aligned with EU standards.
“This landmark free trade agreement with New Zealand will unlock a raft of new export opportunities for EU businesses and SMEs, for both goods and services,” Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People. “It also contains strong sustainability commitments, including on climate and labour rights. At a time of challenging geopolitical shifts, ambitious win-win trade deals with reliable global partners are worth more than ever. I look forward to swift ratification by the New Zealand side so this Agreement can quickly enter into force and benefit our economies and green transition,” he added.
Agri-food: stimulating exports while shielding EU sensitivities
After applying the Agreement, EU farmers will immediately have much better opportunities to sell their produce in New Zealand. Tariffs will be eliminated on day one on key EU exports such as pig meat, wine and sparkling wine, chocolate, sugar candy and biscuits.
EU farmers will see benefits beyond the tariff cuts. The FTA will protect the list of EU wines and spirits (close to 2,000 names), such as Prosecco, Polish Vodka, Rioja, Champagne and Tokaji. In addition, it will protect in Zealand 163 of the most renowned traditional EU products (Geographical Indications), such as Asiago, Feta, Comté or Queso Manchego cheeses, Istarski pršut ham, Lübecker Marzipan, and Elia Kalamatas olives.
The Agreement considers the interests of sensitive EU agricultural sectors, including dairy products, beef and sheep meat, ethanol and sweetcorn. For these sectors, there will be no liberalisation of trade. Instead, the Agreement will only allow zero or lower tariff imports from New Zealand in limited amounts (through so-called Tariff Rate Quotas).
The most ambitious sustainability commitments of any free trade agreement
The EU-New Zealand FTA is the first to integrate the EU’s new approach to trade and sustainable development (TSD) announced in the Communication “The power of trade partnerships: together for green and just economic growth”.
Both sides agreed to ambitious TSD commitments covering various issues based on cooperation and more vigorous enforcement. For the first time in an EU free trade agreement, the deal has a dedicated sustainable food systems chapter, a dedicated trade and gender equality article, and a specific provision on trade and fossil fuel subsidies reform. The deal also liberalises environmental goods and services at entry into force.
Before the Agreement can enter into force, New Zealand must complete its ratification procedure. This is expected to happen in the first or second quarter of 2024.
