EU and New Zealand agree free trade deal

The EU and New Zealand have concluded a free trade agreement, giving a boost to a strained global trading system.

The agreement will eliminate all tariffs on EU exports to New Zealand and improve access to the bloc for products from the country’s powerhouse meat and dairy industries, as well as fruit and vegetables.

The deal, covering trade and investment, is the first Brussels has struck in three years after resistance in several member states to reductions in trade barriers.

EU trade commissioner Valdis Dombrovskis said the agreement had unprecedented provisions on sustainability and labour rights. The two sides could impose sanctions against each other for any breach of the Paris climate agreement to cut carbon emissions.

“This is a new generation of trade deal, with both sides set to make real economic and environmental gains,” he said.

New Zealand’s prime minister, Jacinda Ardern, flew to Brussels to finalise the deal on Thursday with Ursula von der Leyen, president of the European Commission. The pair highlighted the “shared democratic values and interests” of the two parties.

Haggling over agricultural products dominated four years of talks and almost sunk them. Wellington has abolished farm subsidies and wants new markets for its competitively priced beef, lamb, butter and milk powder.

New Zealand farmers will have to end the use of protected EU names, such as feta and Manchego cheese over the next few years.

Asked about the agricultural package, New Zealand trade minister Damien O’Connor said: “No one likes it, so we must have got it about right.”

Some 97 per cent of the country’s exports will enter the EU tariff free.

Bilateral trade in goods between the two partners was €7.8bn in 2021, with trade in services hitting €3.7bn in 2020. The deal could cut some €140mn a year in duties for EU companies.

The EU in recent years has clinched deals with Mercosur, the South American trading bloc, and Mexico. It has also finished talks with Chile. But several governments are insisting on extra conditions protecting forests in the Amazon before ratifying the Mercosur deal.

A deal with Canada entered into force provisionally in 2017, and is still awaiting ratification in several countries. Dombrovskis said sustainability concerns had held up the deal with Canada. Fifteen EU member states wrote to him last week demanding he conclude more deals.

Dombrovskis said he hoped the New Zealand agreement, which should be signed next year, would be ratified by the European parliament and member states within two years.

“In terms of sustainability this is the most ambitious trade agreement ever concluded,” he said. “We hope this will also facilitate the ratification process.”

Markus Beyrer, director-general of BusinessEurope, the EU employers’ lobby group, said the deal was a “welcome and much-needed resumption of an ambitious EU trade agenda”.

“The geoeconomic context marked by supply chain disruptions demands resilience from the EU by spreading and mitigating risk through market diversification, both for imports and exports,” he said.

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