New Zealand trade deal: not just a cheap bottle of plonk…

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There has been a sceptical reaction in the UK to the news of a free trade deal with New Zealand. Britain’s farmers are anxious about competing with New Zealand’s meat and dairy producers. The most advertised benefits to the UK are cheaper white wine, kiwi fruit and honey.

In general, free trade brings lower prices and a greater variety of goods and services for consumers. This is good news if you want to save money on your shopping. However, there is much more to this trade deal than the price and range of products on supermarket shelves. 


Why is there a new free trade deal with New Zealand?

Since Brexit, the UK has had more flexibility to negotiate trade deals independently rather than as part of the EU. Leaving the single market has made it necessary for Britain to look beyond Europe.

Striking a new trade deal with New Zealand, which is part of the Commonwealth, makes sense for both countries. 

Is the trade deal with New Zealand good for Britain’s economy?

Criticism of the new deal stems partly from anxiety over Brexit. Many see the free trade deal with New Zealand as a poor substitute for the benefits of the single market. In contrast, New Zealand can look forward to reconnecting with the UK, a market where 50% of its exports were destined before Britain joined the EEC in 1973. 

The National Farmers Union has reacted with serious concerns about the impact of cheaper imports of meat and dairy on Britain’s farmers.

The tariffs on meat and dairy imports from New Zealand will gradually reduce over a period of several years to lessen the impact. Shoppers loyal to British farmers can still choose to buy British produce, but many will take advantage of cheaper products on the shelves. 

Economic forecasters are not predicting a rise in GDP for the UK as a result of the deal. In contrast, New Zealand’s president Jacinda Adern has described the agreement as ‘one of our best deals ever’. 


What is in the trade deal other than lamb and kiwi fruit?

The free trade deal with New Zealand includes mutual benefits that don’t need to be transported in a container. Here are some of the advantages laid out by the UK government.


The UK government intends to use the new relationship with New Zealand to make it ‘easier for UK investors to expand their footprint and become more profitable in New Zealand’. Screening thresholds will be raised and barriers to UK investment in the New Zealand economy will be removed. 

Financial services

The trade deal will allow for increased competition, communication and stability between the financial services sectors of the UK and New Zealand, aiming to ‘promote sustainable finance and diversity in finance’. There will be greater access to New Zealand markets for financial and insurance services. 

Digital trade

In 2019, 40% of the services the UK exported to New Zealand were delivered digitally. There is an intention to cut red tape and facilitate digital trade between the two countries.


The trade deal will include a commitment to allow greater access for UK professionals and business people to operate in New Zealand. Families of UK professionals working long term in New Zealand will be able to join them. UK companies will be able to establish a base in New Zealand, and small businesses will be able to expand into the new market.

Post pandemic, moving from the UK to New Zealand will be a possibility again.

What will be the long-term effects of the trade deal?

Boris Johnson has set the tone for the UK’s future trading relationship not just with New Zealand, but with the wider Indo-Pacific region and Canada. It brings the UK a step closer to joining the Trans-Pacific Partnership (CPTPP) free trade area, which has a GDP of over £8 trillion.

There are criticisms of the deal on an environmental basis because of the distance between the two counties. Inevitably there will be an increase in the transportation of goods. Tariffs are being removed from British exports including clothing, buses and excavators. However, the agreement includes a clause that allows either country to put restrictions in place, when necessary, to mitigate negative environmental impacts.

Along with the recent Aukus defence pact, free trade agreements with New Zealand and Australia emphasise the UK’s move towards closer relationships with non-European countries.

Will products from New Zealand be much cheaper?

Increased competition and no tariffs should put a little downward pressure on prices. Many of us will appreciate paying a few pence less for a bottle of New Zealand wine. We might still need to dip into our savings for a jar of rare and expensive New Zealand Manuka honey, though.

The post New Zealand trade deal: not just a cheap bottle of plonk… appeared first on The Motley Fool UK.

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