EU-New Zealand free trade deal gets green light in Trade Committee
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24. Oktober 2023 In Aktuell, Allgemein, EN

EU-New Zealand free trade deal gets green light in Trade Committee

-Trade deal sets out unique sanctionable commitments to climate and labour standards

-EU geographical indications protected

-Creates opportunities for EU firms in procurement on equal footing with local companies

-The full Parliament is set to cast its final vote in November

The Committee on International Trade backed the free trade agreement between the EU and New Zealand on Tuesday.

The committee gave its consent to the free trade agreement by 27 votes, 2 votes against and 2 abstentions and recommends that Parliament’s plenary should do the same. The deal will remove 100% of New Zealand tariffs on EU exports at entry into force and will lift 98.5 % of EU tariffs on New Zealand trade after seven years.

Under the deal, all EU geographical indications (GIs) are protected for wines and spirits as well as a list of 163 famous EU foodstuff GIs. The agreement also defends European producers of sensitive agriculture products, such as beef and several dairy products: for these sectors, the agreement will allow zero or lower tariff imports from New Zealand only in limited amounts.

The agreement is the EU’s first to include enforceable commitments to the Paris Agreement and to core International Labour Organization (ILO) standards, with sanctions as a last resort in cases of breaches. MEPs state that the free trade agreement “sets a benchmark in the area of sustainable trade and should be considered a gold standard in current and future FTAs negotiations”.

Bilateral trade in goods between the EU and New Zealand reached €9.1 billion in 2022, with the EU being New Zealand’s third-biggest trade partner. EU firms exported to New Zealand €6.3 billion of goods (in 2022) and €2.7 billion of services (in 2021). Trade between New Zealand and the EU is expected to increase by 36%, trade in goods could increase by 47%, whereas the services trade could increase by 14%, according to the European Commission. EU investment flows into New Zealand could increase by over 80%.

The accompanying draft report, setting out the Parliament’s position, was adopted by 23 votes in favour, 3 against and 5 abstentions.

The main elements of the trade deal:

Removal of duties: The agreement will remove duties on all EU goods exports to New Zealand on day one. 91 % of New Zealand goods will enter the EU duty-free on day one, rising to 97% after seven years. Some New Zealand exports, such as kiwifruit, apples, onions, wine, fish, mussels and squid, will have immediate full EU tariff elimination. To protect some sensitive EU agricultural sectors, tariff rate quotas will apply to New Zealand products such as sheep meat, beef, butter, cheese and milk powder imports.

Services: The agreement includes service sector-specific regulatory provisions on delivery services, telecommunications, financial services, international maritime transport services, aviation services (such as ground handling services).

Agriculture and geographical indications: The agreement will eliminate tariffs from day one on key EU exports such as pigmeat, wine and sparkling wine, chocolate, sugar confectionary and biscuits. The agreement will protect the full list of EU wines and spirits (close to 2000 names) such as Prosecco, Polish Vodka, and Tokaji, and 163 of the most renowned traditional EU products (geographical indications, GIs), such as Feta, Istarski pršut ham, Lübecker Marzipan, Elia Kalamatas olives. To protect EU producers of sensitive products, several dairy products, beef and sheep meat have zero or lower tariff imports from New Zealand only in limited amounts. New Zealand wine GIs, such as Marlborough and Central Otago, will be protected in the EU market.

Procurement: The agreement provides for European businesses access at different levels of the New Zealand state on equal footing with local companies. The New Zealand procurement market is worth some €60 billion a year, according to Commission data.

Sustainable development: For the first time in an EU trade agreement, there could be trade sanctions, as a matter of last resort, in case of serious violations of core labour and climate commitments. The deal also removes tariffs on green goods and services, such as renewable energy and energy efficient products. The agreement’s Trade and Sustainable Development (TSD) chapter includes provisions on trade and fossil fuel subsidy reform, sustainable food systems, and women’s empowerment.

Next steps

Plenary is expected to vote at its November session in Strasbourg. Once the European Parliament has given its consent, the Council decides to conclude the agreement, and the agreement is ratified by New Zealand, it can then enter into force, possibly by mid-2024.

Background

On 21 June 2018, negotiations were officially launched in New Zealand. Twelve negotiating rounds were held between July 2018 and March 2022, before a political agreement was announced on 30 June 2022. New Zealand is an important partner for the EU in the Pacific region, and the EU hopes that the new free trade deal can set an example for future agreements in the area. New Zealand politically plays a significant role in multilateral forums as well. In a geopolitical context, the FTA fits into the EU’s effort to solidify relations with like-minded countries.