Stephen Jacobi, NZIBF Executive Director, speaks to the Confederation of Indian Industry Partnership Summit in New Delhi about The Future of Multilateralism.
Britain here we come!
We are excited about the Agreement in Principle (AiP) on a future free trade agreement with the United Kingdom!
Some 139 years after the first refrigerated vessel left for the “mother country” and 48 years since Britain cast its lot with a united Europe, New Zealand and the UK are back in the business of freeing up bilateral trade and investment. This Agreement in Principle will clearly require more work, but both governments have put down a clear marker about their future intentions.
How did we get here?
We have written about this negotiation on several occasions each time reminding of the need for an ambitious, high quality and comprehensive outcome. Our 2018 report outlined the reasons why this agreement would be beneficial for both sides. Most recently we even said: “To be a champion of free trade, you have to believe in it. You have to believe that the benefits of opening your market outweigh any potential short-term pain”. Clearly the British Government, with its focus on “global Britain”, has absorbed this message and with an eye on future membership of the Comprehensive and Progressive Trans Pacific Partnership (CPTPP) has sought to move forward with New Zealand as well as Australia as part of a longer game.
A good deal – both ways
We’ve often said – trade agreements and are only worth doing in the first place if they give rise to new trade and investment. The NZ/UK agreement would appear to reach a high and welcome benchmark in terms of comprehensiveness – tariffs are finally removed on all products within 10-15 years. That end point may be on the high side, but commercially meaningful access is provided, on entry into force, across all New Zealand’s key export sectors including dairy, meat (lamb and beef), horticulture, wine, honey and fish. This should translate into some big new opportunities for exporters – not enough to lessen the importance of China and Asian markets, but enough to make a difference to exporters’ market options.
Trade agreements and are only worth doing in the first place if they give rise to new trade and investment. The NZ/UK agreement would appear to reach a high and welcome benchmark in terms of comprehensiveness
Services are included, such as financial services and telecommunications of particular importance to the UK. The Agreement provides UK suppliers the ability to deliver services in New Zealand, and vice versa, as well as new facilitation for investment but does not provide what some may regard (mistakenly, we would say) as the infamous mechanism for investor state dispute settlement. In a significant concession, New Zealand has agreed to extend the copyright term by 20 years (to 70 years) but does not need to do so for another 15 years. We can expect a similar concession to be made in a future NZ/EU FTA.
Next generation trade
The agreement delivers the next generation of trade rules. On the one hand there are forward looking provisions in the digital space, reflecting the importance of the way interoperable digital systems enable goods trade today. On other hand both governments are at pains to show that trade agreements can be made to work for all and address global issues like environment and climate change, labour, the inclusion of women and Indigenous people. So, the UK and New Zealand have chosen in this putative agreement to go even further than previously and to set a high standard. Of particular note is that the Agreement is set to include an Indigenous trade chapter, as well as continuing of course to recognise the importance of Te Tiriti o Waitangi.
This agreement comes at a time when supply chains face extraordinary disruption. The global mood may be sombre, but concluding trade agreements is still possible, if governments put their mind to it. Although this negotiation has been conducted virtually, to the great credit of negotiators, there is nothing virtual about the value of the FTA for both New Zealand and the UK – that is, if agreement in principle is followed in due course by the final, signed and ratified agreement.
This post has been prepared by Stephen Jacobi, Executive Director of the NZ International Business Forum. An earlier version of this piece was published by Radio NZ here.
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