New Zealand and the European Union (EU) are currently reflecting on whether or not to proceed to the negotiating table to try to negotiate a new free trade agreement (FTA). A decision is expected later this year.
Europe is already a very significant trade and investment partner for New Zealand: it is a top export market, a very important source of imports, and it is our second-largest source of investment.
New Zealand companies are beginning to engage in strategic partnerships with European manufacturers and service providers in addition to supplying consumers directly – but there is scope to do much more.
We have a long history of shared culture, values and economic engagement, and Europe has 500 million very wealthy consumers, who earn a lot, spend a lot and are interested in consuming the kinds of products and services that New Zealand produces best.
But although the relationship is in reasonable shape, many New Zealand exports still face barriers, at the border or behind it, which add costs, generate uncertainty or in some cases even make trade uneconomic.
Our trade arrangements are thirty years old, and leave New Zealand at a disadvantage compared to competitors with their own preferential access.
And there are missed opportunities: New Zealand has a lot to offer but may not even be on the radar for European companies who could provide essential capital inflows, or European manufacturers engaged in high value-added production.
The opportunities are in Europe but also linking in to value chains and networks potentially spanning from Europe into the Asia-Pacific.
An FTA would offer significant new opportunities to both sides to expand business in agriculture and food as well as technology, services (including tourism and education, and environment), niche and high-value manufacturing, research and investment.
New Zealand and Europe could negotiate a modern, cutting-edge FTA that helps to build a new global trade architecture and enhances the prosperity of both sides, including by:
- Raising the profile of each trading partner in the eyes of consumers, manufacturers, service providers and investors in the other economy;
- Reducing costs in relative and absolute terms, and making it easier to do business, allowing New Zealand to supply its high-quality goods and services on an equal footing with its third-country competitors and domestic European producers;
- Giving European business better and more secure access to competitively-priced intermediate goods and investment opportunities;
- Linking Europe with an economy that is deeply embedded in the economic architecture of the Asia-Pacific, offering dynamic new opportunities to both sides, and
- Ensuring that business on both sides can call on a full range of trade options to meet the economic challenges of the decades ahead
Trade agreements are good for business. A high-quality, ambitious and comprehensive FTA with the EU is strongly in the interests of the New Zealand business community, and would be good for Europe too.
The New Zealand International Business Forum urges the Government and its European counterparts to proceed as soon as possible to the negotiating table, with ambition and determination to succeed in delivering a modern, comprehensive and commercially-meaningful FTA.
* Stephen Jacobi is the Executive Director of the NZ International Business Forum