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Freshfields Risk & Compliance

| 4 minutes read

UK-New Zealand Free Trade Agreement signed

Our recent note on the UK-Australia agreement foreshadowed the conclusion of a UK-New Zealand agreement: this has now been signed.

It is important to keep this new UK-New Zealand agreement in perspective: New Zealand is a small economy, and the benefits over time are estimated at only £1bn or £2bn a year. The removal of tariffs on UK goods exported to New Zealand will only be worth around £17m (sic) per year and on New Zealand goods exported to the UK, not much more than £35m per year (of which alcohol would represent the bulk, at about 75 per cent).

The UK government identifies the new agreement as bringing rather similar benefits to those under the UK-Australia agreement, albeit on a rather smaller scale. Thus there will be tariff-free access for UK goods, better investment opportunities, a boost for UK service providers, and, as with the Australia agreement, more opportunities to work and travel. Also as with the UK-Australia agreement, this agreement too is described as a stepping stone on the way to membership of the CCTPP.

Again, the agreement itself is essentially a fairly standard form free trade agreement, containing similar advances to the UK-Australia agreement in the areas of digital trade and animal welfare in particular, and also in some respects in services. It affirms adherence to applicable WTO rules and contains provisions on trade in goods, customs, trade facilitation, rules of origin, SPS, non-tariff barriers and trade remedies. Provisions on these matters commonly appear in all FTAs, but these two agreements represent an advance on previous models and specifically aim at simplifying and speeding up customs processes.

The UK-New Zealand agreement contains similar protections (non-regression and non-derogation clauses) and commitments to the UK-Australia agreement, designed to prevent the parties from lowering their standards to gain a competitive edge. Here again the UK Trade and Agriculture Commission has been asked to provide a written advice on this, in respect of environmental, animal welfare and animal and plant safety standards. The UK-New Zealand agreement recognises that the UK has strengths in industrial goods, notably machinery and motor vehicles, while New Zealand has a very strong agricultural sector.

Tariffs are removed on 100 per cent of UK exports to New Zealand and on most New Zealand exports to the UK. Most of these measures take effect immediately and go a little further than liberalisation under the UK-Australia Agreement. New Zealand will continue to be subject to UK tariff rate quota (TRQ) protections and product specific safeguards on beef and sheep meat for a total of up to 15 years, and on cheese and butter for up to 5 years. Fresh apples will be fully liberalised after 3 years. According to the UK government’s economic impact assessment, New Zealand has not taken up all of the existing TRQs that it enjoyed under WTO rules so the risk to UK agriculture is thought to be limited and outweighed by potential advantages to the consumer.

On the services side, the economic impact assessment notes that the UK share of the New Zealand services market has increased in recent years, albeit not as quickly as trade in goods. The agreement aims to facilitate inward investment which stands at under £1bn in either direction at present. On top of MFN and national treatment provisions, the agreement adopts a negative listing approach so that these guarantees apply by default to all services unless specifically excluded. The agreement also aims to facilitate provision of business services notably by provisions on recognition of home country qualifications in a wider range of situations, e.g., enabling lawyers to act in arbitration and mediation in each other’s countries and more liberal provisions on professional staff being able to travel to provide services under contract in specified sectors.

There is a separate chapter on financial services which includes the usual market access and national treatment protections against discrimination. There are also specific commitments for the insurance sector (commitment regarding large risks insurance) and the asset management sector (commitment regarding portfolio management services for sophisticated clients). The safeguarding of cross-border flows of financial data, pioneered in the UK-Japan FTA and included in the UK-Australia FTA, is also included here. And the agreement also builds on some novel features of the UK-Australia FTA: the promotion of diversity and inclusion in the financial services industry; the encouragement sustainable finance (including by cooperation in the development and adoption of internationally recognised standards); and the protection of back offices from arbitrary requirements.

What marks the new agreement out from more conventional free trade agreements is in the provisions on aligning the two countries economically and politically. If the UK-Australia agreement is a model for the sort of agreement the UK would like to be able to negotiate with major trading partners including the United States, the UK-New Zealand agreement takes that idea a step further:

  • Tariff and services provisions which take account of the respective competitive advantages of the parties are a welcome move away from the sort of zero-sum game which characterise more traditional free trade agreements: e.g., the modern rules of origin provisions agreed with New Zealand allow for incorporation of levels of non-UK origin inputs beyond what could be agreed in the UK-EU TCA;
  • Innovative joined-up thinking on environmental matters: as with the UK-Australia Agreement, the parties are to make common cause on environmental matters in international fora and reaffirm their commitments to the Paris Agreement while preserving the UK’s right to regulate to meet its net zero climate commitments. The agreement also contains commitments on moving away from fossil fuels, deforestation and marine pollution. At the same time the parties have agreed special provisions for favourable treatment of environmental goods and to encourage trade and investment in low carbon services and technology;
  • The parties agree to cooperate in economic fora such as the WTO and envisage greater cooperation on areas such as digital trade, the environment and trade and gender equality;
  • New sections on a common approach to labour laws, access for small business to trade under the agreement and, a first for the UK, provisions on gender equality and equality for Māori people; and
  • A new section on consumer protections related to trade under the agreement.


A big agreement with large ambitions, going well beyond the limited context of UK-New Zealand trade. There are new opportunities there, particularly for small business and for services providers, and those excellent New Zealand wines will come in a little cheaper as a result of the removal of tariffs.