New Zealand trade deal: PM hails ‘great’ new pact
Written by Hitmix News on 21 October 2021
British sheep farmers could face increased competition from New Zealand lamb imports as a consequence of a free-trade deal which has been secured and hailed as “great” by Prime Minister Boris Johnson.
The deal, agreed in-principle by Mr Johnson and his counterpart Jacinda Ardern during a video call on Wednesday, will cut tariffs on British exports including cars and clothes, and popular New Zealand imports including wine and honey as well as lamb.
The National Farmers’ Union (NFU) said it was worried about the implications of an agreement it said “offers nothing in return” to British farmers.
Image: The NFU said there was a big downside for sectors such as red meat, dairy and horticulture
Trade between the UK and New Zealand was worth £2.3bn last year, equivalent to 0.5% of the UK’s commerce with the European Union, but the government expects volumes to increase as a consequence of the deal.
Brexit: Which countries has the UK agreed trade deals with?
It is the second free trade agreement (FTA) reached from scratch since Brexit after that with Australia, though London and Canberra are yet to sign a deal first announced with some fanfare in June.
Ministers hope it will further the UK’s goal of joining the Pacific trading bloc that includes Australia, New Zealand, Canada and Japan.
The principles of the New Zealand FTA are similar to the Australian accord, with the most controversial tariffs, on agricultural goods, phased out over a 15-year period to try and ease the concern of British farmers.
Under the deal New Zealand exporters will be able to send 35,000 tonnes of lamb to the UK tariff-free for the first four years, rising to 50,000 tonnes for 10 years before quotas are removed altogether.
Image: Boris Johnson agreed the deal in a video call with New Zealand’s Jacinda Ardern Pic: Tim Hammond/10 Downing St
Last year, it exported 39,000 tonnes of lamb to the UK worth £212.5m, and New Zealand exports to the UK have fallen in recent years.
A similar timetable for the phasing out of tariffs will apply to dairy produce.
The government says the deal will create new opportunities for technology and service companies to access the New Zealand market, and hailed the removal of 20% tariffs on imported wine, and 16% on honey.
British cars, buses and construction vehicles, the most valuable UK export to New Zealand, will benefit from the removal of 10% tariffs as will clothing, while gin, chocolate, cheese and crisps will no longer attract a 5% import tax.
Mr Johnson said: “This is great trade deal for the United Kingdom, cementing our long friendship with New Zealand and furthering our ties with the Indo-Pacific.
Image: Earlier this year, Mr Johnson reached a trade deal with Australian PM Scott Morrison
”It will benefit businesses and consumers across the country, cutting costs for exporters and opening up access for our workers.”
The NFU warned, however, that British farming interests have been sacrificed in order to secure deals with Australia and now New Zealand.
“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,” said its president, Minette Batters.
“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.
Image: Under the deal New Zealand will be able to sell 35,000 tonnes of lamb to the UK tariff free for the first four years
“The government is now asking British farmers to go toe-to-toe with some of the most export orientated farmers in the world, without the serious, long-term and properly funded investment in UK agriculture that can enable us to do so.
“This is why it is very, very difficult for the NFU to show any support for these deals.
“They involve significant upsides for farmers on the other side of the world who can now access our hugely valuable market but contain little discernible benefit for UK producers, either at home or overseas.”
Labour said that according to the government’s own analysis the deal would cost jobs in agriculture and deliver no additional growth.
Image: Tariffs on imported wine will be removed
“It is a deal whose only major winners are the mega-corporations who run New Zealand’s meat and dairy farms, all at the expense of British farmers who are already struggling to compete,” said shadow trade secretary Emily Thornberry.
“But for British jobs, growth and exports, this deal is yet another massive failure.”
She cited figures from a 2020 government analysis that suggested a deal would add between -0.1% and 0% to GDP over 15 years, compared to 0.35% to New Zealand’s, and add £112m to UK exports.
Analysis by Paul Kelso, business correspondent
The significance of a trade deal with New Zealand lies not in the size of the agreement, but its symbolism for post-Brexit Britain.
The agreement will certainly not have a transformational impact on either nation’s economy. According to government analysis cited by Labour, a deal with Wellington will add precisely zero to UK GDP, and possibly less, and may nudge New Zealand up to 51st in the list of its most valuable trading partners.
Far more important for the government is the fact that, four months after reaching a similar deal with Australia, British negotiators have secured another free-trade agreement on terms built from scratch, rather than rolled-over from existing EU arrangements.
Just as important as the signal sent by the renewal of vows with old Commonwealth partners is that both New Zealand and Australia are members of the trading bloc the UK wants to join, having left the one on its doorstep.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) may be a mouthful, but it brings together major economies including Japan, Canada and Singapore.
While the strategy is clear the counter from many trade observers is that these deals have been secured too cheaply. The Australia deal has been widely seen as a huge win for Canberra with little or no concrete upside for the UK.
As the most politically sensitive sector for any nation in a trade deal agriculture is a decent bellwether, and while antipodean farmers are delighted with tariff-free access to UK markets there is only concern from Britain’s sheep hills and cattle pastures.
There is another cautionary note in the Australia deal. Four months after Boris Johnson and Scott Morrison posed among the Downing Street roses the actual deal is still not done after Australia’s chief negotiator returned home from the UK last week without a signature.
Ms Ardern said: “This world-leading free trade agreement lays the foundations for even stronger connections as both countries embark on a new phase in our relationship. It is good for our economies, our businesses and our people.”
Mike Cherry, national chair of the UK’s Federation of Small Businesses, said: “New Zealand has long been a priority market for UK’s small exporters – more than a quarter of which already sell there – and we welcome efforts to build on existing trade ties that go back many decades.”