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Negotiations on a free trade agreement (FTA) between the UK and New Zealand began in June 2020. After six formal negotiating rounds, the two sides have reached agreement in principle just over a year later.
The final text of the FTA is yet to be published as negotiators still need to agree the small print and both sides will need to undertake legal reviews over the coming weeks. However, the announcements made today show that the deal is broad in scope, offering greater market access for goods and services, improved business travel arrangements and new opportunities to invest in each other’s economies.
The deal also includes provisions in a wide range of other areas common to modern FTAs, such as in government procurement, competition, intellectual property and trade remedies.
Bilateral trade between the UK and New Zealand currently stands at £2.8 billion – about 0.2% of the UK’s total trade. The relatively small trade volumes involved mean this FTA was never going to be a game-changer for the UK in purely economic terms. Indeed, the Government’s own forecasts show the deal is expected to deliver growth of just 0.01% to UK GDP over the next 15 years. As with the FTA agreed with Australia earlier this year, it also sets new precedent in opening-up the UK’s heavily protected agricultural sector to greater external competition.
However, this agreement does deliver practical value in helping to forge a more positive commercial environment in both countries, making it easier for firms to do business – whether travelling to deliver service contracts, using new simpler customs procedures or benefitting from digital documentation. The deal also has a strong strategic purpose, forging new economic ties in the Indo-Pacific region and acting as a stepping stone to the UK’s membership of CPTPP - the vast trade area spanning the Pacific rim.
The text of the agreement hasn’t yet been published and still needs to be scrutinised; however, we do now have a good sense of the direction of travel and businesses can begin to consider how to benefit from the new terms of trade.
Whether you’re in goods or services, large or small, you should evaluate your operations, supply chain and investment decisions with respect to the UK-New Zealand trade corridor. The UK is only going to become more deeply integrated with this region over the coming years, so there is no time like the present to find out where the opportunities might lie for you.
For support in assessing your trade and investment priorities, Deloitte’s specialists are on hand to help.
Amanda is Head of Tax & Trade Policy for Deloitte UK. She leads a team undertaking analysis and preparing insights across the spectrum of tax and trade matters including Budgets, technical consultations, trade negotiations and post-Brexit border rules. Amanda has held a wide number of roles during her career including leading client relationships, global representative to the OECD, mentoring and non-executive board roles. As well as previously being a partner at another Big 4 firm, she was in industry at Vodafone plc as global head of indirect taxes and responsible for managing tax value chain and centralisation initiatives. Amanda has an active home life with four children and is also passionate about horses, riding whenever free time permits and supporting the charity World Horse Welfare including volunteering as Trustee and Treasurer for 7 years.
James is Head of International Trade at Deloitte. Based in the Tax & Trade Policy Group and Brexit Insights team, James works with clients from all sectors to help them understand what the UK’s evolving economic, foreign and trade policy agenda means for their decision-making, how they can maximise opportunities and mitigate risks. James was previously an Adviser to Deloitte and has wide-ranging experience in Westminster politics. He has served as a special adviser to two Secretaries of State for International Trade, and as a political adviser to the Conservative Party. He also held roles working for the then Chancellor of the Exchequer, at the UK Parliament and as a Director at a political consultancy. He holds a masters’ degree in public policy.