UK secures trade deal with New Zealand

The agreement should make it easier for Brits and Kiwis to travel to one another’s countries for work, the government said

Anna Isaac
Thursday 21 October 2021 12:26
UK cost of living ‘a real cause of concern’, minister admits

The UK has secured a trade agreement with New Zealand, the government has announced.

Sealed on a Zoom call between Boris Johnson and his Kiwi counterpart Jacinda Ardern on Wednesday, the so-called agreement-in-principle is a major step towards a full free trade agreement.

One of the greatest long-term benefits from the deal, which has limited immediate economic value given New Zealand’s relatively small population, will be making it easier for British businesses to sell services to the country. Bilateral trade was worth £2.3 billion in 2020. The country accounts for just 0.2 per cent of UK trade.

A final-hour refusal by New Zealand to improve its market offer on services delayed talks which had been expected to conclude on this phase of dealmaking at the end of August, according to people familiar with the talks.

Now, the deal is expected to offer similar provisions on areas like business travel to the Australia agreement, The Independent understands. Provisions easing travel requirements for contractual services suppliers who want to work in New Zealand’s market are a first for the country in any of its trade deals.

In return, the UK has given New Zealand greater market access for agricultural products such as lamb.

Prime Minister Boris Johnson said the deal would cement a “long friendship with New Zealand” and noted that it followed the £9.7 billion in investment announced alongside Tuesday’s Global Investment Summit.

His counterpart, New Zealand’s prime minister Jacinda Ardern said the agreement was “world-leading” and “good for our economies, our businesses and our people”.

Securing a deal is a critical step in the UK’s effort to join a much larger trade bloc, the 11-member strong Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Trade secretary Anne-Marie Trevelyan said the post-Brexit pact was indicative of “refocusing Britain on the dynamic economies of Asia-Pacific”.

The government also said that “UK workers will benefit from improved business travel arrangements and professionals such as lawyers and architects will be able to work in New Zealand more easily”.

However, the deal is likely to pave the way toward having qualifications recognised in both countries’ jurisdictions rather than grant it immediately, The Independent understands.

The deal, which dramatically lifts the tariff-free amount of lamb which can be sold to the UK, has not been welcomed by British farmers. They argue they are still shut out of the detailed engagement in trade policy they were initially promised.

NFU President Minette Batters said: “The announcement of this trade deal with New Zealand, coupled with the Australia deal signed earlier this year, means we will be opening our doors to significant extra volumes of imported food – whether or not produced to our own high standards – while securing almost nothing in return for UK farmers. We should all be worried that there could be a huge downside to these deals, especially for sectors such as dairy, red meat and horticulture.

“Instead of repeating the refrain that these deals will be good for British agriculture, our government now needs to explain how these deals will tangibly benefit farming, the future of food production and the high standards that go along with it on these shores,” she said.

In the aftermath of the Australian deal’s announcement, Labour’s shadow trade secretary Emily Thornberry said the then trade secretary Liz Truss had thrown British farmers “to the wolves”.

Meanwhile, progress on finalising the Australia deal has slowed, according to officials at the trade department. Full texts have yet to be agreed, even after Canberra sent trade minister Dan Tehan to the UK in recent weeks.

The government is set to champion the New Zealand deal’s provisions to ease trade in environmental goods, after leaked documents suggested it had massaged language around commitments to limit global warming to 1.5C, under the Paris climate agreement, to smooth the course of a deal with Australia.

Cutting import duties – one effect of the New Zealand-UK deal – does not immediately result in lower prices for consumers, but it could make export markets more attractive for businesses.

British-made chocolate, gin, and clothes are likely to benefit from a 10 per cent reduction on import duties in New Zealand under a deal. New Zealand’s wine exporters could see tariffs equivalent to 20 pence a bottle cut in the UK.

The hiatus between the full legal texts being sealed via further negotiation will come as a relief for trade department staff. They have faced the “sleep pinch” of the 12-hour time difference with New Zealand, one negotiator told The Independent.

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