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The New Zealand-United Kingdom free trade agreement will come into force at the end of May, removing most tariffs on exports to the United Kingdom weeks earlier than hoped.
Prime Minister Chris Hipkins, in London for King Charles’ coronation, and British Prime Minister Rishi Sunak announced the start date for the agreement on Thursday morning.
The deal was initially hoped to be finalised by the end of 2022, but after political turmoil and two new prime ministers in the United Kingdom, the UK expected to bring the deal into force in mid-2023.
Hipkins said Sunak had supported bringing forward the deal to the May 31 start date.
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“From day one New Zealand exporters will save approximately $37 million per year in tariff elimination alone, so the earlier than expected entry into force is a much-needed boost for our exporters right now,” Hipkins said, in a statement.
“It is incredibly pleasing to get the final leg of this FTA over the line and for our exporters to start benefiting from it by the end of this month.”
Sunak said the trade deal marked “a new chapter in the great friendship between our two countries”.
“This deal will unlock new opportunities for businesses and investors across New Zealand and the UK, drive growth, boost jobs, and most importantly build a more prosperous future for the next generation.”
Pool/Getty Images
King Charles III receives the Prime Minister of New Zealand, Chris Hipkins, during an audience at Buckingham Palace on May 3, 2023 in London.
Trade Minister Damien O’Connor said the free trade agreement is expected to grow New Zealand’s GDP by nearly $1 billion.
“This deal will cut costs for exporters, create opportunities for New Zealand businesses to grow and diversify their trade, and help tackle rising living costs by delivering quality, price-competitive UK imports.”
The free trade agreement, signed in March 2022, will mean 69 per cent of current exports will be tariff-free from the first day it is in force. The remaining exports, which include fresh apple, butter and cheese, and beef and sheep meat, will progressively become tariff-free over 15 years.
For the UK, all exports to New Zealand will be tariff-free as soon as the deal comes into force, with likely products to benefit including British gin, chocolate, motorhomes and campervans.
The agreement will also open New Zealand up to British contractors and business professionals, and raise the threshold for scrutinising UK investments in New Zealand to $200 million.
The UK is currently New Zealand’s seventh-largest trading partner, and the free trade agreement was expected to boost exports by 40 per cent.
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