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Why has New Zealand negotiated a free trade agreement with the United Kingdom?
The United Kingdom is one of New Zealand’s closest and most important partners. We already have deep economic and people-to-people connections. Prior to the UK FTA, the UK was New Zealand’s seventh-largest trading partner, with two-way trade worth NZ$5.3 billion for the year to December 2022.
But there was scope for us to do more through a free trade agreement that removed tariffs, addressed non-tariff barriers, and provided improved access for New Zealand services exporters and investors and companies wanting to bid for UK government contracts.
Conclusion of a high quality, comprehensive and inclusive FTA:
- was an important next step in growing New Zealand’s future economic relationship with the UK
- creates new opportunities for New Zealanders to grow their business in the UK and:
- promotes our sustainable development and inclusive trade objectives to enable the benefits of trade to reach all communities in New Zealand.
Benefits to New Zealand
A free trade agreement with the United Kingdom brings benefits to New Zealand businesses, consumers and communities including by:
- reducing the costs for existing trade and creating new opportunities to grow our goods and services trade to the UK;
- making it easier for companies of all sizes to do business in the UK, including through digital means;
- establishing a 'level playing field' for New Zealand businesses trading, operating and investing in the UK market; and:
- strengthen collaboration with the UK across a range of trade and economic areas.
Independent economic modelling was commissioned to assess the impact of the NZ-UK FTA. This was undertaken by ImpactECON, which estimated that the effect of the NZ-UK FTA, when fully implemented would increase New Zealand’s exports to the UK by 51.3% - 53%, and boost New Zealand’s annual real GDP by between NZ$710 million and NZ$811 million (0.10% - 0.12%) relative to the 2040 modelled baseline. Moreover, the relatively short phase-in periods for most of the goods market access benefits mean the bulk of these economic gains will be realised within the first few years of the Agreement entering into force.
Read the full ImpactECON report [PDF, 545 KB].
ImpactECON’s modelling of the impact of the NZ-UK FTA on New Zealand’s economy was broadly similar to the initial estimate arrived at by the UK Department for International Trade (DIT) in June 2020. This initial UK estimate indicated a New Zealand-UK FTA could lead to an increase in New Zealand exports to the UK by up to 40% and deliver a possible increase to New Zealand’s GDP of some NZ$970 million, as well as an increase of up to 7.3% in United Kingdom exports to New Zealand.
Read the full DIT report(external link).
Key facts on New Zealand-United Kingdom trade
Since entry into force of the UK FTA on 31 May 2023, two-way trade has grown to NZ$7.27 billion.
New Zealand’s main goods exports to the UK include wine, meat, dairy, fruit, machinery, eggs, honey and wool – a total of NZ$1.73 billion.
The main goods imports from the UK include vehicles and parts, machinery, equipment, and pharmaceuticals – a total of NZ$2.18 billion.
Our goods trade is highly complementary and we benefit from strengths in different sectors.
- The UK is a leading supplier of vehicles, turbines and engines, and pharmaceutical products to New Zealand.
- The UK is one of the biggest global importers of food products and benefits from New Zealand’s counter-seasonal production of fresh produce and protein.
There is also substantial services trade, worth NZ$3.37 billion. New Zealand services exports to the UK are dominated by travel, transport and business services.
The United Kingdom is also our closest investment partner in Europe, both as an important source and destination for New Zealand investment.