The European Union (EU) and New Zealand have taken a significant step towards ratifying a major trade agreement. The EU-New Zealand trade agreement has been sent to the Council for signature, which is expected to lead to a bilateral trade growth of up to 30%. This growth could potentially increase EU exports by up to €4.5 billion. Additionally, EU investment in New Zealand is expected to grow by up to 80%, marking a significant improvement in economic cooperation between the two regions.
The deal aims to eliminate all tariffs on EU exports to New Zealand, which will open up the New Zealand services market in critical sectors. In addition, EU investors in New Zealand and vice versa will receive non-discriminatory treatment, and EU companies will have improved access to New Zealand government procurement contracts. The agreement will also protect the complete list of EU wines and spirits and save 163 of the most renowned traditional EU products (Geographical Indications) in New Zealand.
Small businesses will be among the primary beneficiaries of this agreement, as it includes a dedicated chapter on small and medium enterprises. This chapter will reduce compliance requirements and procedures, allowing for a quicker flow of goods. In addition, the agreement will stimulate EU exports in the agri-food sector by eliminating tariffs on crucial EU exports. Several sensitive agricultural products, including dairy products, beef and sheep meat, ethanol, and sweetcorn, will not be subject to the liberalization of trade, and, instead, will have zero or lower tariff imports from New Zealand only in limited amounts (through the so-called Tariff Rate Quotas).
Concerns From EU Farmers
The 27-member EU, with its 445 million population, has been the leading destination for New Zealand’s horticulture trade profile for decades. Now dominated by the kiwifruit, apples, and onions trade, a range of lesser-known NZ products (e.g., buttercup squash, apricots, frozen berries) will benefit from the removal of tariffs. The agreement has received mixed reviews in Europe, with French Farmers fearing unfair competition with New Zealand farms and subsequent economic regions/ countries.
“Neither the use by New Zealand farmers of herbicides classified as harmful to humans and banned in Europe since 2003, such as atrazine, nor the presence of palm oil cakes responsible for deforestation in the feed of New Zealand cows, nor the absence of regulatory obligations governing the transport of animals, appear to be obstacles to the arrival of New Zealand meat on the European market, with preferential customs duties, in the text under negotiation,” the union denounced.
“This first post-FEU (French Presidency of the European Union) free trade agreement will undoubtedly pave the way for the ratification of other agreements, including the much-feared agreement with Mercosur, which is expected to be voted on by the EU Council by the end of the first half of 2023. It is, therefore, a test case”, fears the FNB.
Photo by Christian Lue on Unsplash
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