The EU and New Zealand today signed their Free Trade Agreement (FTA), which will bring significant benefits to the EU. The agreement will reduce tariffs by around 140 million euros per year paid by EU companies from the very first year of its implementation. As a result, bilateral trade is expected to increase by up to 30% over a decade thanks to this agreement, while the value of annual EU exports could potentially reach €4.5 billion. EU investment in New Zealand has the potential to increase by up to 80%. The landmark agreement also includes unprecedented sustainability commitments, including respect for the Paris climate agreement and basic labor rights.

The deal now goes to the European Parliament for approval. After the ratification process is completed in both the EU and New Zealand, the agreement will enter into force.

The trade deals are part of the EU’s approach to open trade – or ‘the partnership’ – which is one of the three aims of the European economic security strategy unveiled last month. The agreement with New Zealand also demonstrates how the EU is stepping up its cooperation with this fast-growing region of the world, implementing its Indo-Pacific strategy.

The President of the European Commission, Ursula von der Leyen, said: “New Zealand is a key partner of ours in the Indo-Pacific region and this free trade agreement will bring us even closer. With today’s signature, we have taken an important step towards the implementation of the agreement. This modern free trade agreement offers significant opportunities for our businesses, farmers and consumers, both in the EU and in New Zealand. With unprecedented social and climate commitments, it promotes fair and green growth while strengthening Europe’s economic security.”

New export opportunities for large and small businesses

The EU-New Zealand FTA will provide new opportunities for business in the following ways:

-elimination of all tariffs on EU exports to New Zealand;
-opening up the New Zealand services market in key sectors such as financial services, telecommunications, maritime transport and delivery services;
-ensure non-discriminatory treatment of EU investors in New Zealand and vice versa;
-improving EU companies’ access to New Zealand public procurement for goods, services, works and works concessions;
-facilitation of data flows, predictable and transparent rules for digital commerce and a safe online environment for consumers;
-prevent unjustified data geo-restriction requirements and maintain high standards of personal data protection;
-helping small businesses to export more through special capital for small and medium enterprises;
-significantly reducing compliance requirements and related processes to facilitate faster flow of goods;
– New Zealand’s significant commitments to protect and enforce intellectual property rights, in line with EU standards.

Agri-food sector: boosting EU exports while protecting EU sensitivities

EU farmers will have much better opportunities to sell their produce in New Zealand once the deal is implemented. Tariffs will be removed from day one on key EU exports such as pork, wine and sparkling wine, chocolate, confectionery and biscuits.

EU farmers will reap benefits beyond tariff reductions. The FTA will protect the full list of EU wines and spirits (almost 2,000 appellations), such as Prosecco, Polish Vodka or the appellations Rioja, Champagne and Tokaji. In addition, 163 of the best-known traditional EU products (geographical indications) will be protected in New Zealand, such as Asiago, Feta, Comté or Queso Manchego cheeses, Istarski pršut ham, Lübecker Marzipan or Kalamata olives.

The agreement takes into account the interests of EU producers of sensitive agricultural products: a range of dairy products, beef and sheep meat, ethanol and sweet corn. For these sectors, there will be no trade liberalization. But the deal will only allow imports at zero or lower tariffs from New Zealand in limited quantities (through so-called tariff rate quotas).

The most ambitious sustainability commitments in a free trade agreement yet

The EU-New Zealand FTA is the first to incorporate the EU’s new approach to trade and sustainable development, as set out in the Communication ‘The Power of Trade Partnerships: Together for Green and Fair Economic Growth’, issued a just a week before the conclusion of free trade agreement negotiations in June 2022.

Both sides agreed on ambitious commitments on trade and sustainable development, covering a wide range of issues based on cooperation and enhanced enforcement. For the first time an EU free trade agreement includes a dedicated chapter on sustainable food systems, a dedicated article on trade and gender equality and a dedicated provision on fossil fuel trade and subsidy reform. The agreement also frees up environmental goods and services upon its entry into force.

Next steps

The text will now be forwarded to the European Parliament for approval. After approval by Parliament, the Council can issue the conclusion decision and, once New Zealand has notified that it has also completed the ratification process, the agreement can enter into force.