EU and New Zealand agree free trade deal
The EU and New Zealand have signed a free trade agreement, giving impetus to a tense world trade system.
The agreement will cover all rates EU exports to New Zealand and improve access to the block for products from the country’s largest meat and dairy industry, as well as fruit and vegetables.
The deal, which includes trade and investment, is the first Brussels has signed in three years following resistance in several member states to easing barriers to trade.
EU Trade Commissioner Valdis Dombrovskis said the agreement contains unprecedented provisions on sustainability and labor rights. The two sides can impose sanctions on each other for any violation of the Paris climate agreement to reduce CO2 emissions.
“This is a new generation of trade agreements, where both sides will reap real economic and environmental benefits,” he said.
New Zealand Prime Minister Jacinda Ardern flew to Brussels on Thursday to finalize the deal with European Commission president Ursula von der Leyen. The pair stressed the “shared democratic values and interests” of the two parties.
Bargaining over agricultural products dominated four years of talks and nearly sank them. Wellington has done away with farm subsidies and wants new markets for its discounted beef, lamb, butter and powdered milk.
New Zealand farmers will have to stop using protected EU names such as feta and Manchego cheese in the coming years.
Asked about the agricultural package, New Zealand Trade Minister Damien O’Connor said: “Nobody likes it, so we must have got it right.”
About 97 percent of the country’s exports will enter the EU tariff-free.
Bilateral trade in goods between the two partners reached €7.8 billion in 2021, and trade in services reached €3.7 billion in 2020. The deal could save around €140 million a year in rights for EU companies.
In recent years, the EU has signed agreements with Mercosur, the South American trading bloc and Mexico. It has also completed talks with Chile. But several governments are pushing for additional conditions to protect Amazon forests before ratifying the Mercosur deal.
A deal with Canada provisionally entered into force in 2017 and is awaiting ratification in several countries. Dombrovskis said sustainability concerns had held up the deal with Canada. Fifteen EU member states wrote to him last week to close more deals.
Dombrovskis said he hopes the New Zealand agreement, due to be signed next year, will be ratified by the European Parliament and member states within two years.
“In terms of sustainability, this is the most ambitious trade deal ever signed,” he said. “We hope this will also facilitate the ratification process.”
Markus Beyrer, director-general of BusinessEurope, the EU employers’ lobby group, said the deal was a “welcome and much-needed relaunch of an ambitious EU trade agenda”.
“The geoeconomic context characterized by supply chain disruptions requires EU resilience by spreading and mitigating risks through market diversification, both for imports and exports,” he said.