The UK and New Zealand have reached an agreement in principle on a free trade deal as the two countries look to improve existing trade ties and London deepens its partnership in the Pacific following its exit from the European Union.
The agreement reflects what the UK and New Zealand negotiating teams have jointly decided as of 20 October 2021. Some of the key commitments are that both countries will remove customs duties on 100% of tariff lines for originating products and will share tariff preference utilisation data.
This would result in tariffs as high as 10% to be removed on a huge range of UK goods, from clothing and footwear to buses, ships, bulldozers and excavators. On the other hand, popular New Zealand products such as Sauvignon Blanc wine, Manuka honey and kiwi fruit will be cheaper for British citizens. Overall, tariffs on 97% of the items will be removed the day the free trade agreement comes into effect.
Both countries to benefit
“This is a great trade deal for the United Kingdom, cementing our long friendship with New Zealand and furthering our ties with the Indo-Pacific. It will benefit businesses and consumers across the country, cutting costs for exporters and opening up access for our workers,” the UK Prime Minister Boris Johnson said in a statement.
“This world-leading free trade agreement lays the foundations for even stronger connections as both countries embark on a new phase in our relationship. It is good for our economies, our businesses and our people,” said New Zealand’s Prime Minister Jacinda Ardern.
The UK-New Zealand trade was worth £2.3 billion last year and is set to grow under the deal. However, neither country elaborated what could be the increase.
UK deepens Pacific ties
The deal is doubly important for the UK as it follows advanced free trade agreements struck already with Australia and Japan and helps pave the way for the UK to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a free trade area of 11 Pacific nations with a gross domestic product of £8.4 trillion in 2020.