The European Union and New Zealand today signed a free trade agreement (FTA), which will bring significant gains for both partners. The deal will cut around €140 million a year in tax for EU companies from the first year of application. As a result, bilateral trade is expected to grow by up to 30% within a decade thanks to this agreement, with annual EU exports potentially growing to €4.5 billion. EU investment in New Zealand has an 80% growth potential. This historic agreement also includes unprecedented sustainability commitments, including respect for the Paris Climate Agreement and basic labor rights.
The trade deals form part of the EU’s open trade approach – or “partnership” – which is one of the three objectives of the European Economic Security Strategy unveiled last month. This deal with New Zealand also demonstrates how the EU is stepping up engagement with this expanding region of the world, in line with its Indo-Pacific Strategy.
Ursula von der Leyen, President of the European Commission, said: “New Zealand is a key partner for us in the Indo-Pacific region, and this free trade agreement will bring us even closer together. With today’s signature, we have taken an important step towards making the agreement a reality. This modern free trade agreement holds great opportunities for our businesses, our farmers and our consumers on both sides. With unprecedented social and climate commitments, it drives fair and green growth, bolstering Europe’s economic security.”
New export opportunities for companies large and small
The EU-New Zealand FTA will provide new opportunities for companies by:
• elimination of all tariffs on exports between the two partners;
• market opening for services in key sectors such as financial services, telecommunications, shipping and delivery services;
• ensuring non-discriminatory treatment of EU investors in New Zealand and vice versa;
• improve the access of companies from the two partners to public contracts for goods, services, works and works concessions;
• facilitate data flows, predictable and transparent rules for digital commerce and safe online environment for consumers;
• prevent unreasonable data location requirements and maintain high standards of personal data protection;
• helping small companies to export more through a chapter dedicated to small and medium-sized companies;
• significantly reduce compliance requirements and procedures to allow for faster flow of goods;
• New Zealand’s significant commitments to protect and enforce intellectual property rights, in line with EU standards.
Ambitious sustainability commitments in a free trade agreement
The EU-New Zealand Agreement is the first to incorporate the EU’s new approach to trade and sustainable development announced in the Communication “The power of business partnerships: together for green and fair economic growth”, adopted in June 2022.
Both sides agreed on ambitious commitments covering a wide range of issues based on cooperation and enhanced enforcement. For the first time in an EU free trade agreement, the agreement has a chapter dedicated to sustainable food systems, an article dedicated to trade and gender equality and a specific provision on the reform of trade subsidies and fossil fuels. The agreement also liberalizes environmental goods and services upon entry into force.
The text will now be forwarded to the European Parliament for approval. After Parliament’s approval, the Council can adopt the Decision on conclusion and, once New Zealand notifies that it has also completed its ratification procedure, the agreement can enter into force.