New friends from an old continent

There is a certain irony in New Zealand’s current free trade negotiations with the European Union (EU), underway in Wellington this week. 

In 1973, when the United Kingdom (UK), then our biggest trading partner by far, threw in its lot with the European Economic Community, we in New Zealand faced a massive challenge of diversifying our markets. Luckily we found Asia on our doorstep.

Some 45 years later, the UK is seeking to leave the EU (more about that another day), while we are looking towards the EU as a means to diversify our markets away from what some at least perceive as an over-reliance on China!

It was back in October 2015 that New Zealand and the EU announced their intention to negotiate a Free Trade Agreement (FTA) to take full advantage of a deep rooted and continuously expanding trade relationship. It then took three more years to finalise mandates and get the negotiations to get underway. During a visit to Wellington in June EU Trade Commissioner Dr Cecilia Malmstrom said the FTA marked an “important milestone for the EU NZ relations.”

• The EU is currently New Zealand’s third largest trading partner, with two-way trade valued at NZ$22.2 billion as at March 2018
• The EU is New Zealand’s largest source of imports and our third largest export destination.

In a discussion paper in 2015 we described the principal benefits of a future NZ/EU FTA for New Zealand. These included:

• access to a large market with over 513 consumers, raising New Zealand’s profile in the region
• the potential elimination of tariffs and non-tariff barriers, reducing the cost and increasing the speed of business
• greater investment into primary and secondary sectors, enabling greater efficiency and lowering production costs
• greater integration into regional value chains in Europe; and
• the prospect of further innovation and technological development.

In light of the second round of negotiations occurring this month, we have now released an updated summary of the FTA negotiating process and the relationship as it stands today.

The time may not have been right earlier for a comprehensive trade deal with the EU. While Asia is no less important to us, now is the time to put our relations with some old friends on a new level.

This post was written by Elzanne Bester, Intern, and Stephen Jacobi, Executive Director at the NZ International Business Forum.   You can follow the FTA negotiating process on the MFAT site here.