Policy paper

UK-New Zealand FTA: agreement in principle explainer

Published 20 October 2021

This was published under the 2019 to 2022 Johnson Conservative government

The UK and New Zealand have reached agreement in principle on a free trade agreement (FTA). The text below summarises the agreement in principle.

Goods

New Zealand and the UK commit to establishing mechanisms to remove trade barriers, including tariff and non-tariff barriers. This will make it easier for both sides to trade with each other.

New Zealand and the UK commit to providing the most liberal possible treatment for goods of interest to both countries, while taking into account product sensitivities.

Goods market access

New Zealand and the UK commit to removing all tariffs on trade in goods between our two countries.

New Zealand commit to remove tariffs on all goods imports that originate from the UK from the day of entry into force of the FTA.

The UK commits to remove tariffs on the vast majority of goods imports that originate from New Zealand on the day of entry into force of the FTA. In the remaining cases, the removal of tariffs will take place over a transitional period.

Rules of origin

Rules of origin provisions in this FTA determine which goods qualify as originating in New Zealand and the UK and therefore qualify for preferential tariff treatment. New Zealand and the UK commit to rules of origin reflecting modern production processes as well as existing and future global value chains. These rules will help determine which products are eligible for tariff-free treatments.

These commitments will ensure that administrative procedures are efficient and minimise costs and red tape by making it simple for traders and customs authorities to prove the originating status of goods. The commitments will also include rules for specific products that support each country’s economic and production interests.

Customs procedures and trade facilitation

New Zealand and the UK commit to ensuring that customs procedures are efficient, consistent, and transparent to help facilitate trade between both countries, while also reinforcing each country’s ability to maintain effective customs control.

Goods will be released from customs within clear timeframes to provide certainty for traders and reduce costs, where possible. There will also be a fixed 90-day period for issuing advance rulings on tariff classification and origin.

Paperwork needed to release goods will be minimised, and there will be no requirement to use a customs broker when importing or exporting goods. Information about customs procedures will be available for traders to access online. Review mechanisms will also be made available to traders in respect of customs authority decisions.

Sanitary and phytosanitary (SPS) measures

The SPS chapter will set out how New Zealand and the UK will facilitate trade whilst protecting human, animal and plant life and health. SPS measures ensure that food traded is safe to eat, and that animals and plants are free from pests and disease. The chapter will contain provisions concerning the application of food safety and plant health measures. The UK already has a separate high standard Sanitary Agreement with New Zealand which covers and effectively facilitates our trade in animal products. Therefore, the SPS chapter will focus on plants, plant products, and processed plant-based foods.

Animal welfare

This chapter will set out how New Zealand and the UK will uphold their respective animal welfare standards and cooperate to promote the development and increased recognition of animal welfare standards in international fora.

Technical barriers to trade

New Zealand and the UK commit to provisions ensuring that any regulations that either side introduces are non-discriminatory and do not create unnecessary obstacles to trade. These provisions will preserve each country’s ability to take measures to fulfil legitimate objectives, including for the protection of health, safety and the environment.

New Zealand and the UK will increase cooperation and strengthen our understanding of each other’s technical regulations, standards, conformity assessment procedures and market surveillance systems. This can help to unblock barriers to trade and reduce the likelihood of future barriers forming.

Trade remedies

New Zealand and the UK commit to protecting businesses from unfair trading practices or unforeseen surges in imports.

The chapter will affirm both countries’ rights and obligations under the framework of the World Trade Organization (WTO).

The FTA will include a general bilateral safeguard mechanism which will provide a safety net for industry if they face serious injury, or threat of serious injury, from increased imports as a direct consequence of the FTA. This safeguard will apply to all goods – including those under a tariff rate quota.

Cross-border trade in services

New Zealand and the UK commit to opening up services markets to make it easier for services companies to trade and for professionals to operate in each other’s economies.

New Zealand and the UK commit to maintaining high standards for all services sectors, including cross-border trade in services, professional services, financial services, maritime and delivery services, and telecommunications. Both countries will provide generous market access for services suppliers from the other country, including for example specific commitments for New Zealand and UK-flagged vessels.

Domestic regulation

New Zealand and the UK commit to seeking to address ‘behind the border’ barriers. This will help to ensure businesses have greater certainties of procedural fairness when seeking authorisation to supply a service or invest in each other’s markets.

The provisions will build on the Joint Initiative on Services Domestic Regulation text proposal (under negotiation at the WTO) and will include commitments on publication of information, processing of applications and course for appeal. These provisions will promote a trade-friendly regulatory system that seeks prompt and transparent authorisation.

Financial services

New Zealand and the UK commit to provisions which create certainty for financial services providers, support the long-term competitiveness of both countries’ financial services sectors, and safeguard their stability.

These commitments will build on the current financial services trading relationship with New Zealand through ambitious cross-border market access commitments and provisions to ensure the free flow of financial data. Both countries also commit to high standards of transparency, and to promote sustainable finance and diversity in finance.

Telecommunications

New Zealand and the UK commit to provisions that guarantee fairness, non-discrimination and transparency in accessing New Zealand and the UK’s telecommunications networks and services. This will create benefits for New Zealand and UK telecoms suppliers seeking to provide services in the other’s territory.

Temporary entry of business persons

New Zealand and the UK will take new commitments on mobility that will facilitate the entry and temporary stay of a wide range of business persons travelling between the two countries for business purposes. This includes new and unprecedented commitments from New Zealand that will allow UK service suppliers to deliver contracts more easily in New Zealand. This will particularly benefit the professional and business services sector.

The chapter will provide greater certainty for businesses and encourage the movement of business persons by providing clarity on application procedures, setting out conditions for the transparent provision of information, and promoting cooperation on returns and readmissions.

Investment

New Zealand and the UK commit to investment arrangements to underpin the already strong investment relationship between our two countries. New Zealand and the UK will commit to rules that ensure fair and open competition and address barriers to UK investment across New Zealand’s economy.

These commitments will cover all investment, portfolio and foreign direct investment, and ambitious market access commitments in services and non-services sectors.

Investors will receive fair treatment and protection from expropriation of assets, while the right of states to regulate in the public interest will be preserved.

The FTA will not include an investor-state dispute settlement mechanism.

The FTA will also include higher investment screening thresholds for UK investors in New Zealand, meaning fewer UK investments will be subject to review.

Digital trade

New Zealand and the UK commit to increasing opportunities for digital trade for all business and consumers, while also ensuring world-leading standards for personal data protection. Commitments will include strong rules on trusted data flows and the minimisation of data localisation requirements. This will help to create a more certain and secure online environment, supporting increased growth in digital trade between the two countries.

The FTA will reduce unnecessary barriers and promote interoperability of digital trading systems, making trade cheaper, faster and easier. This will include the recognition of electronic contracts, electronic authentication and trust services, and digital identities frameworks.

Additionally, innovation and emerging technologies will be supported through cooperation between the countries and through commitments to make government information more transparent and available.

Government procurement

New Zealand and the UK commit to making the entire procurement process accessible, from initial market scoping through to awarding the contract. The FTA will also include provisions that encourage practices which facilitate the participation of small and medium enterprises in the procurement process.

New Zealand and the UK commit to market access commitments beyond the level held by both of them through the WTO’s Government Procurement Agreement. This will give suppliers from both countries greater guaranteed access to each other’s government procurement market.

Intellectual property (IP)

New Zealand and the UK commit to ambitious IP provisions that support our vibrant economies through adequate, effective and balanced protection and enforcement of IP rights, and that encourage innovation and creativity.

The FTA will include provisions on copyright, design rights, patents, trademarks, trade secrets, enforcement and test data. It will also include a commitment from New Zealand to extend the term of copyright protection by 20 years for authors, performers and producers of phonograms over a 15-year period, bringing its protection in line with UK terms for published work.

The FTA will enshrine a provision on Artist Resale Right, providing new income streams for UK visual artists when their artwork is resold in New Zealand.

The FTA will also include a commitment that if New Zealand expands its existing Geographical Indications (GI) scheme to include agri-foods, or substantively amends its domestic registration system, the FTA will be reviewed to ensure this potential protection is afforded to UK GIs and that reciprocal protection is afforded to New Zealand GIs in the UK.

The FTA will not affect the cost of medicines for the NHS.

Competition

New Zealand and the UK commit to effective competition law and enforcement that will promote open and fair competition and promote cooperation between national competition authorities.

Individuals and businesses that trade with New Zealand can feel confident that they will be trading and competing in open and fair competition. Our agreed provisions will protect the rights of individuals and businesses abroad when under investigation by the other country’s competition authority.

Consumer protection

New Zealand and the UK commit to establishing a consumer protection chapter to increase consumers’ confidence when engaging in cross-border trade by guaranteeing a robust level of protection from harmful activities. This will include protections such as both countries maintaining laws against false claims about goods or services, and providing protection to consumers when making online purchases.

State-owned enterprises and designated monopolies (SOEs)

New Zealand and the UK commit to including a chapter on SOEs that will provide rules aimed at ensuring open and fair competition between commercially oriented SOEs and private businesses, for example rules around non-discrimination. Provisions will ensure that SOEs, particularly those providing public services, can continue to operate as they do now.

Good regulatory practice and regulatory cooperation

New Zealand and the UK commit to supporting a transparent and predictable regulatory environment for business. Both countries will work together to prevent regulations becoming unnecessary obstacles to trade, while respecting New Zealand and the UK’s right to regulate.

This will include commitments to make the development of major regulatory measures transparent and accessible.

Labour

New Zealand and the UK commit to including a chapter affirming commitments to international standards and labour protections and to ensure open and fair competition. It will include provisions addressing other areas of trade and labour, including on women’s equality in trade and the workplace, tackling modern slavery in supply chains, and promoting quality employment and decent working conditions.

Both countries commit to including mechanisms for domestic stakeholders to provide input relating to the implementation of the chapter and allow for the use of consultations.

Environment

New Zealand and the UK commit to an ambitious chapter on environment and climate change that demonstrates global leadership and will be precedent-setting in a number of areas.

The FTA will promote mutually supportive trade and environmental policies to address the urgent threat of climate change and support both governments’ net zero climate goals. This includes affirming commitments to the Paris Agreement and protecting the right to regulate to achieve climate change objectives. It will also liberalise tariffs on a range of environmental goods, and will make commitments on ending unabated coal-fired electricity generation and supporting the phase down of use of hydrofluorocarbons.

The chapter will include forward-leaning environmental provisions aimed at combatting illegal deforestation, biodiversity loss and the illegal wildlife trade, alongside commitments to facilitate the transition to a circular economy.

Small and medium-sized enterprises (SMEs)

New Zealand and the UK commit to publishing information about the FTA which is considered useful for SMEs. The chapter will include provisions that facilitate cooperation between New Zealand and the UK to reduce barriers to SMEs’ access to international markets and global supply chains. This will include exchanging best practice, participating in trade promotion programmes, and working together to identify ways to help SMEs take full advantage of opportunities provided by the FTA.

Trade and gender equality

New Zealand and the UK commit to addressing barriers that could prevent women from accessing the benefits of trade and investment, through a dedicated chapter and provisions throughout the FTA.

This will include cooperative activities aimed at enhancing women’s access to the benefits of the FTA, and addressing barriers for women in trade such as lack of access to markets, business and leadership networks and finance. Both countries also commit to cooperating on monitoring gender-focused statistics related to trade, and gender-focused analysis of trade policies.

Indigenous trade

New Zealand and the UK commit to the inclusion of an indigenous trade chapter, which will recognise the importance and value of the Māori to New Zealand’s economy and society and the unique relationship between the UK, New Zealand and Māori.

Both countries will recognise the benefits of increased Māori participation in trade and investment. We will work together to support New Zealand’s efforts to ensure that Māori businesses are also able to maximise the opportunities arising from the FTA, alongside New Zealand and UK companies.

Trade and development

The FTA will include one of the first ever dedicated development chapters within a bilateral FTA between two advanced economies. It will include new mechanisms to extend the benefits of increased trade to developing countries.

For example, New Zealand and the UK will share best practice on technical assistance and capacity building, as well as consider how changing trade flows affect developing countries. There will also be development-focused provisions in other chapters, including technical barriers to trade, digital trade and services.

Anti-corruption

New Zealand and the UK commit to best-practice anti-corruption provisions.

Both countries will outline their shared ambition to prevent and combat the distorting effect of bribery and corruption on international trade and investment. New Zealand and the UK will also re-affirm their international obligations both at the OECD and United Nations.

Transparency

New Zealand and the UK commit to international best-practice transparency provisions. This will include promoting transparency and encouraging the participation of the private sector and civil society in government decision-making. Both countries commit to encouraging digital publication where possible and considering accessibility and user-centred design principles. 

Cross-cutting (general exceptions and general provisions, initial provisions and general definitions, final provisions)

New Zealand and the UK commit to including general provisions and exceptions that will support issues such as national security and policy-making discretion in matters of taxation and macroeconomic management, consistent with international best practice in these areas.

There will be some specific reservations in areas such as climate change or health, in line with the government’s manifesto commitment that the NHS will not be on the table in trade negotiations.

Dispute settlement

New Zealand and the UK commit to an effective and timely dispute settlement mechanism. This will provide a clear avenue and prompt progress to dispute resolution if required, boosting certainty and flexibility for New Zealand and UK traders.

What happens next?

Following agreement in principle (AIP), several steps need to be completed before the FTA can enter into force. The negotiations to finalise the FTA text will proceed in light of the principles agreed in the AIP document. Once the negotiations are concluded, the FTA will need to be signed by the parties.

Once finalised, the UK has to carry out a number of important steps including the publication of an independently scrutinised impact assessment and publication of the FTA text.

The Parliamentary scrutiny process can also begin. The relevant Parliamentary committees will be given time to produce a report on the FTA should they wish. The government will prepare a report, as required by the Agriculture Act 2020, on the extent to which measures in the FTA  are consistent with maintaining UK statutory protections for human, animal or plant life or health, animal welfare and the environment. This report will be laid before Parliament. In producing its report, the government will draw on advice and analysis from the independent Trade and Agriculture Commission (TAC). The TAC’s report will also be published.

Once the TAC advice and report under the Agriculture Act have been completed, we will lay the FTA  (together with an Explanatory Memorandum) formally before Parliament. This will trigger the start of the 21-sitting day Constitutional Reform and Governance Act 2010 scrutiny procedure.

Where legislation is required to implement the FTA, this will need to be prepared and passed by Parliament in the usual way. Following completion of both parties’ domestic procedures, the FTA would then enter into force in accordance with its terms.