New Zealand trade deal: new agreement with UK explained - and what it means for food and drink industry

The Government says it will cut red tape and create new opportunities for UK tech and service firms. But food producers fear they will be undercut

The UK has agreed a free trade deal with New Zealand in a move Boris Johnson said would “benefit businesses and consumers” around the country.

It was sealed late on Wednesday (20 October) via a video call with New Zealand Prime Minister Jacinda Ardern - although the deal has not yet been signed.

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While Mr Johnson and many business leaders heralded the announcement, not everyone is pleased.

Farmers fear their produce will be undercut on price, while environmental groups have expressed concern at New Zealand’s sustainability credentials.

So, what is in the free trade agreement, what will it change - and does it threaten British food production?

Here’s what you need to know.

What’s in the UK-NZ trade deal?

The agreement in principle covers more than 30 areas, including food, animal welfare and financial services.

Tariffs (the taxes or duties put on top of the cost of imports and exports) as high as 10% would be removed from a range of goods, including clothing and footwear, buses, ships and bulldozers, according to the Government.

It claimed that while trade with New Zealand was worth £2.3bn last year, this new deal would grow that figure while also giving the UK an advantage over other nations in a market it said was expected to grow 30% over the next decade.

Prime Minister Boris Johnson sealed a trade agreement in principle with New Zealand during a video call with New Zealand PM Jacinda Ardern (image: Getty Images)

In the UK, the most notable difference for consumers will be seen in their food shops.

The price of some of New Zealand’s best-known products - like Sauvignon Blanc wine, Manuka honey and kiwi fruits - is expected to go down.

Shoppers will also have greater access to New Zealand dairy, red meat and horticultural products, which will come to the UK in ever increasing volumes over the next 15 years before gaining potentially unlimited access to UK consumers after the 15-year mark.

There is also the prospect that New Zealand could become a major destination for gap-year students as UK residents will be able to work more freely in the country.

One of the most eye-catching elements of the deal is an agreement for the UK to advance the recognition and protection of the New Zealand Haka - the ceremonial dance most usually seen before international rugby games involving New Zealand.

The trade deal will see New Zealand lamb producers get more access to UK consumers (image: Getty Images)

What they said

Mr Johnson said the deal would “benefit businesses and consumers across the country, cutting costs for exporters and opening up access for our workers”.

He said: “This new deal will help drive green growth here and on the other side of the world in New Zealand.”

However, the World Wildlife Fund for Nature (WWF) called into question the sustainability of New Zealand’s farming industry.

Angela Francis, WWF chief advisor on economics and economic development, said: “While New Zealand is one of the leaders on many aspects of environmental action internationally, they still have a long way to go to put their agriculture sector on a sustainable footing.

“As we see more and more trade deals coming down the pipeline, the clearer it is that the UK needs a written trade policy to explain how these trade deals align with the overarching economic plan to decarbonise the UK economy and its supply chains.

"As part of this, we urge the Secretary of State to adopt core environmental standards for all food sold in the UK, sending a clear signal to international partners that we are not prepared to undermine the UK’s transition to greener farming by importing products produced in ways that harm the planet."

UK farmers could be undercut by New Zealand producers, the NFU has warned (image: Getty Images)

Food itself is also a controversial aspect of the deal.

With more and more produce set to come from New Zealand as well as Australia - with whom the UK signed a trade deal earlier in 2021 - UK farmers believe they could be undercut on price.

This is because both countries’ farmers tend to operate at a scale that far exceeds that of UK producers and also do not have to adhere to the same stringent animal welfare rules that exist in the UK - in NGO World Animal Protection’s Animal Protection Index, the UK has a ‘B’ ranking, while New Zealand has been given a ‘C’ and Australia a ‘D’.

Both of these factors mean their cost of production is usually much lower than it is for a UK farmer.

National Farmers Union (NFU) president Minette Batters said: “The government is asking British farmers to go toe-to-toe with some of the most export orientated farmers in the world, without the serious, long-term and properly funded investment in UK agriculture that can enable us to do so.

“This is the sort of strategic investment in farming and exports that Australian and New Zealand governments have made in recent decades.

“The fact is that UK farm businesses face significantly higher costs of production than farmers in New Zealand and Australia, and it’s worth remembering that margins are already tight here due to ongoing labour shortages and rising costs on farm.”

Batters added that the viability of “many British farms” could be damaged as a result of this deal, which would in turn mean less British produce on supermarket shelves.

Despite these concerns, UK businesses have been largely supportive of the announcement.

Mike Cherry, national chair of the Federation of Small Businesses, explained: “It’s fantastic to see progress being made on a free trade agreement with New Zealand.

“New Zealand has long been a priority market for UK’s small exporters – more than a quarter of which already sell there – and we welcome efforts to build on existing trade ties that go back many decades.”

The Confederation of British Industry (CBI) also praised the news as it could smooth the path for a deal with the lucrative Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which includes countries like Mexico and Canada.

Overall, trade policy expert David Henig wrote on Twitter that he believed New Zealand stood to gain the most from the deal.

Why is the UK signing trade deals?

Since the UK officially left the EU on 31 December 2020, one of the UK Government’s key goals has been to sign trade deals with other nations around the world.

This is partly because the UK’s ability to sign its own trade agreements was seen as a key benefit of Brexit, but it has also come out of necessity.

No longer having access to the deals signed by the EU means the UK has to pursue its own agreements to buy goods from and sell goods to other countries at favourable prices.

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