Guidance

UK-New Zealand Free Trade Agreement: chapter explainers

Published 28 February 2022

1. Initial Provisions and General Definitions

This chapter includes initial provisions applicable to the whole agreement and establishes a free trade area between the UK and New Zealand. It also includes general definitions used, the territorial scope and a provision that considers the effects of the Protocol on Ireland/Northern Ireland.

2. National Treatment and Market Access for Goods

This chapter will provide for the liberalisation of trade in originating goods between the UK and New Zealand. It will remove tariffs in accordance with each party’s attached tariff schedule.

The chapter will also help to facilitate trade in goods between the parties by reducing non-tariff barriers. In addition to increasing transparency and cooperation and supporting the World Trade Organization (WTO) rules-based system.

The UK and New Zealand have agreed to remove all tariffs on originating goods of the other party.

New Zealand will remove tariffs on all UK goods from the day of entry into force of the agreement.

The UK will in some cases stage the removal of tariffs on New Zealand goods, over a maximum of 15 years. During the transition period, limits will also be applied. Limits will apply to the amount of beef, sheepmeat, butter, cheese and apples which can enter the UK tariff-free from New Zealand.

This is in addition to the general bilateral safeguard mechanism. This will provide protections if industry faces serious injury from increased imports as a direct consequence of the free trade agreement (FTA). This applies to all products.

3. Rules of Origin and Origin Procedures

This chapter and its annexes contain provisions related to the rules of origin for goods. These stipulate the criteria a good/product must meet to be considered originating in the UK and so to qualify for the agreed preferential tariff rates.

Rules of origin exist to ensure that only goods genuinely made in countries party to this agreement will qualify for preferential tariffs. This particularly relates to areas where there may be a risk of circumvention or illegitimate competition.

An exporter/importer generally must demonstrate that their product was either wholly obtained, or substantially transformed through processing, in either the UK or New Zealand. If they can demonstrate this, they can qualify for the reduced tariff rates agreed in this FTA.

The rules agreed reflect modern production processes and global value chains. They minimise red tape for businesses ensuring administrative processes are clear, straightforward and low cost.

4. Customs Procedures and Trade Facilitation

This chapter contains provisions relating to customs procedures and practices. It ensures that custom procedures in both countries are efficient, consistent and transparent and that the provisions reinforce both countries ability to maintain effective customs control.

This chapter will benefit UK exporters by providing traders with greater certainty about the customs clearance process and minimising the cost of trading.

5. Sanitary and Phytosanitary Measures

This chapter sets out how the UK and New Zealand will facilitate trade while protecting human, animal and plant life and health. The SPS chapter will function in parallel with the already established UK-New Zealand Sanitary Agreement, which covers and facilitates our trade in animal products. This chapter therefore focuses on plants, plant products, and processed plant-based foods. The UK and New Zealand have agreed to amend the Sanitary Agreement to cover composite products.

The chapter will allow businesses to benefit from increased transparency and cooperation on each other’s SPS requirements. Provisions on regionalisation will allow for trade to continue when pest outbreaks are safely managed. The chapter also establishes dialogue structures to resolve technical issues and provide routes to ease SPS related market access issues.

This agreement does not create any new permissions or authorisations for imports from New Zealand. Imports will still have to meet the same respective food safety and biosecurity standards in New Zealand and the UK.

The UK and New Zealand both recognise the global threat of antimicrobial resistance. Therefore, the chapter also includes strong commitments to cooperate on this important issue, both bilaterally and in relevant international fora. This includes working together on addressing the unnecessary use of antibiotics in the rearing of animals for food production.

6. Animal Welfare

This chapter commits the UK and New Zealand to work in close partnership on a range of animal welfare matters. This is the first time New Zealand has agreed an animal welfare chapter in an FTA. The chapter contains a clear statement that animals are recognised as sentient beings. Provisions then include a commitment to increased bilateral cooperation, as well as working together in international fora to enhance animal welfare standards.

The chapter affirms the Parties’ right to regulate on animal welfare and to set their respective policies and priorities for the protection of animal welfare.

It also includes forward leaning non-regression and non-derogation clauses on animal welfare between the UK and New Zealand. This commits both countries to not lower their animal welfare standards or make exceptions for their producers in a manner which materially affects trade.

7. Technical Barriers To Trade

New Zealand and the UK have committed to ensuring that any relevant regulations they introduce 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 and conformity assessment procedures. This can help to unblock barriers to trade and reduce the likelihood of future ones forming.

We have agreed cooperation provisions on cosmetics, medical devices and human and veterinary medicines, as well as an Annex on Wine and Distilled Spirits.

8. Trade Remedies

Trade Remedies provide a safety net for domestic industry against unfair trading practices or unforeseen surges in imports of goods.

The chapter includes a general bilateral safeguard mechanism. This allows for temporary tariff increases or a suspension of further tariff liberalisation to protect industry from serious injury or threat thereof, as a result of increased imports through the FTA. Bilateral safeguards can be applied by either party and to all categories of product.

The chapter also affirms both countries’ rights and obligations under the WTO agreements allowing members to apply trade remedies.

9. Cross-Border Trade in Services

This chapter and associated annexes outline the market access and treatment that the FTA guarantees to UK service suppliers. This provides long-term certainty and transparency for service suppliers exporting to and operating in the New Zealand market.

We have agreed a Professional Services and Recognition of Professional Qualifications annex. This will encourage regulators of all regulated professions to establish and operate routes to recognition. This will support UK professionals to have their qualifications recognised in New Zealand and vice versa. It also ensures UK lawyers can practice foreign (including UK) and international law in New Zealand using their existing qualifications.

We have agreed a sectoral annex on International Maritime Transport Services. This is unprecedented for New Zealand and will benefit UK shipping companies and ships flying the UK flag. We have also agreed an annex on Express Delivery Services that ensures UK suppliers operating in New Zealand can do so on a level playing field.   In the associated services schedules, New Zealand has locked in market access commitments. These provide greater transparency and legal certainty than New Zealand has provided in any of its previous FTAs (excluding its relationship with Australia).

10. Domestic Regulation

The Treaty includes a chapter on Domestic Regulation which aims to reduce ‘behind the border’ barriers. It ensures that businesses have greater certainty around the authorisation procedure for obtaining or amending a licence to allow them to supply services in each other’s markets.

The chapter contains provisions that build on the agreed disciplines of the WTO Joint Initiative on Services Domestic Regulation (the ‘WTO JSI’). It includes commitments on publication of information, authorisation fees, processing of applications, allocation of limited numbers of licenses, and appeals of administrative decisions.

The authorisation process is also supported by commitments to process applications electronically, making the process more accessible for UK businesses.

11. Financial Services

The chapter secures UK companies’ ability to deliver high-value financial services to clients in New Zealand. It also supports the long-term competitiveness and stability of the UK’s financial services sector. It promotes innovation in financial services in both countries and builds on the current financial service trading relationship with New Zealand. It includes a commitment to non-discrimination rules that ensure UK and New Zealand firms are treated fairly when providing services in the other Party’s markets. Other commitments include the facilitation of cross-border financial services trade –including for insurance and portfolio management services- and the free flow of financial data across borders. Furthermore, the chapter supports our shared goals and facilitates our continued cooperation in promoting sustainable finance, recognising the importance of environmental, social and governance considerations.

12. Telecommunications

This chapter contains provisions that ensure service suppliers have access to public telecommunications networks and services, ensure transparent, reasonable and non-discriminatory telecommunications regulatory frameworks, and enhance UK-New Zealand cooperation, including on security and diversification.

13. Temporary Entry of Business Persons

The UK and New Zealand take commitments that will facilitate the entry and temporary stay of a wide range of business persons travelling between the two countries for business purposes.

The chapter will provide greater certainty for businesses and facilitate the movement of business persons by providing clarity on application procedures. In addition to setting out conditions for the transparent provision of information.

14. Investment

This chapter and associated schedules contain provisions that commit to strengthening the investment relationship between the UK and New Zealand. UK investors will benefit from broader and deeper market access than New Zealand has ever guaranteed in a previous trade agreement.

15. Digital Trade

This chapter contains provisions that support increased growth in digital trade between New Zealand and the UK. It commits to increasing opportunities for digital trade for all businesses and consumers. The chapter ensures the free flow of trusted data, the prevention of unjustified localisation of data and world-leading standards for personal data protection.

The FTA will reduce unjustifiable barriers to digital trade and promote interoperability of digital trading systems, making trade cheaper, faster and easier. This includes ensuring the legal recognition of electronic contracts and electronic authentication.

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

16. Government Procurement

The chapter increases the guaranteed, non-discriminatory access for UK suppliers to New Zealand government procurements (and vice versa). The scope of the specific procurement market access commitments between the UK and New Zealand is set out in annexes to the chapter.

The text of the chapter contains enforceable rules and standards which create a transparent and non-discriminatory framework for government procurement covered by the FTA.

17. Intellectual Property

This chapter contains intellectual property (IP) provisions that will support our vibrant economies through adequate, effective and balanced protection. In addition to enforcement of IP rights that encourage innovation and creativity. The chapter includes provisions on copyright and related rights, designs , trade marks, geographical indications (GIs), trade secrets, enforcement, patents and test data.

18. Competition

The chapter ensures both Parties promote open and fair competition.

The chapter contains provisions ensuring both nations have comprehensive competition regimes, as part of a transparent regulatory environment. This helps lead to open and fair competition in markets, which benefits consumers.

The chapter includes provisions to maintain national competition law that proscribes anticompetitive (i) agreements, and (ii) practices by enterprises with substantial market power. Additionally, the chapter includes provisions to maintain national competition law that effectively addresses mergers with substantial anticompetitive effects.

It locks in procedural rights for people and businesses under investigation by competition authorities, such as ensuring they have the right to be legally represented. The chapter promotes cooperation between UK and New Zealand competition authorities.

19. State-Owned Enterprises and Designated Monopolies

Organisations controlled by governments and engaged in commercial activities are often known as State-Owned Enterprises (SOEs). This chapter seeks to ensure that SOEs do not distort trade because of their relationship with government. It reassures businesses of each nation’s long-term commitment to guarantee that SOEs operate in accordance with commercial practices.

These provisions will ensure open and fair competition between private enterprises and businesses owned by either government. Open and fair competition will mean consumers benefit from greater innovation and choice, lower prices and greater quality of goods and services.

20. Consumer Protection

The chapter enhances consumer welfare and trust through the promotion of transparent, effective measures to protect consumers.

Consumers can trade with confidence, knowing the chapter will enshrine protections for both UK and New Zealand consumers buying goods and services in each other’s markets. For example, it will ensure both nations have laws to require goods to be of reasonable and satisfactory quality at the time of delivery.

21. Good Regulatory Practice and Regulatory Cooperation

Good Regulatory Practice (GRP) covers provisions that support a transparent, stable and predictable regulatory environment for business.

This includes commitments to make regulations accessible, ensure public consultations when designing regulations, and encourage regulatory authorities to cooperate on current and future regulation.

22. Environment

This chapter sets out our shared commitment to environment and climate change and demonstrates global leadership on these issues. It contains commitments that New Zealand and the UK won’t derogate from their environmental standards to encourage trade and investment. It affirms both Parties’ commitments to multilateral environmental agreements, including the Paris Agreement, and preserves the right to regulate including for net zero.

The chapter sets new precedents, including ambitious commitments on coal and fossil fuels, and an extensive list of environmental goods with liberalised tariffs. It contains commitments on areas including deforestation, biodiversity, sustainable agriculture and the transition to a circular economy, and strengthens cooperation on these issues.

23. Labour

The chapter affirms commitments to international labour standards and to not derogate from these to encourage trade and investment. It also contains commitments for the effective enforcement of labour laws, whilst protecting our right to regulate. The chapter also addresses other areas of trade and labour – this includes gender equality in trade and the workplace, tackling modern slavery in supply chains, and promoting quality employment and decent working conditions.

The chapter includes mechanisms for domestic stakeholders to share their views on implementation. All provisions in the chapter are enforceable.

24. Small and Medium-Sized Enterprises

This chapter contains provisions to help Small and Medium-Sized Enterprises (SMEs) take full advantage of the opportunities this FTA presents. This includes commitments to have dedicated websites to help exporters and promote SME participation in international trade through cooperation.

25. Trade and Gender Equality

The UK and New Zealand have agreed to advance women’s economic empowerment across the Agreement. This chapter enables the UK and New Zealand to work together to support women business-owners, entrepreneurs, and workers to fully access opportunities of international trade.

This chapter complements provisions which advance gender equality in other chapters of this Agreement. The areas covered include services (domestic regulation), SMEs, financial services, procurement, labour, development and digital trade.

26. Māori Trade and Economic Cooperation

This chapter contains provisions for cooperation activities to strengthen the trade relationships between UK, New Zealand and Māori enterprises. This will help Māori enterprises maximise the opportunities arising from the FTA, alongside New Zealand and UK enterprises.

The chapter also recognises the importance and value of the Māori to New Zealand’s economy and society. In addition to the unique relationship between the UK, New Zealand and the Māori.

27. Trade and Development

One of the first chapters of its kind within a bilateral FTA between 2 advanced economies, the chapter is dedicated to trade and development issues. It reinforces the UK’s and New Zealand’s commitment to promoting sustainable and inclusive economic growth, through trade.

The UK and New Zealand acknowledge the importance of development in promoting inclusive economic growth. In addition to the instrumental role that sustainable trade and investment can play in contributing to economic development.

The chapter includes provisions that recognise the value of undertaking and increasing cooperation related to trade and development. This includes through the sharing of best practice on policy and programming and joint advocacy in multilateral fora.

It also allows for monitoring of the impacts of the agreement on developing countries.

The chapter is supported by provisions elsewhere in the agreement which enable the whole FTA to support mutual trade and development objectives.

28. Anti-Corruption

The chapter addresses the trade-distorting effects of corruption and ensures that there are appropriate mechanisms for implementing and monitoring anti-corruption, along with dispute resolution.

29. Transparency

This chapter contains provisions that commit both parties to the promotion of transparency in government decision-making. It also encourages the participation of the private sector and civil society in these pursuits.

30. Institutional Provisions

This chapter contains provisions governing the committees and working groups set up under the agreement. It establishes a Joint Committee that will provide a forum to discuss trade related matters and ensures the smooth operation of the agreement.

It also contains provisions relating to domestic stakeholder engagement, exchange of information between the UK and New Zealand.

31. Dispute Settlements

This chapter contains provisions that commit both Parties to effective and timely dispute settlement. This will provide a clear avenue to arbitration if required.

32. General Exceptions and General Provisions

This chapter ensures flexibility for the UK government to protect legitimate domestic priorities. This includes national security, the NHS, climate change and creative arts through a series of exceptions and general provisions. The chapter also allows New Zealand to protect their domestic priorities in respect of the Māori in relation to the Treaty of Waitangi.

33. Final Provisions

This chapter contains provisions related to the application, amendment, and termination of the agreement as well as its entry into force.