The Free Trade Agreement (FTA) between the European Union and New Zealand entered into force on 1 May 2024. The Agreement creates significant economic opportunities for businesses, farmers and consumers on both sides, as well as strengthening the EU’s ties with a strategic ally in the economically dynamic Indo-Pacific region.
The EU is New Zealand’s third largest trading partner, with which it has steadily increased trade in goods in recent years. According to an impact assessment commissioned by the EU, trade between New Zealand and the EU is expected to increase by 30% with the entry into force of the Agreement, and the elimination of customs duties alone would save businesses EUR 140 million per year. EU investment flows to New Zealand could also increase by more than 80%.
Since its entry into force, the FTA has eliminated duties on industrial products (which were up to 10% in New Zealand), including cars and car spare parts, machinery, chemicals, pharmaceuticals, footwear and clothing, textiles.
With specific reference to the agri-food sector, which is of great interest to Italy, upon its entry into force the Agreement has removed all tariffs on EU exports to New Zealand, including major European export products such as pork, wines and sparkling wines, chocolate, confectionery, dairy products, animal feed. At the same time, considering the sensitivity of some agricultural sectors in the EU, the Agreement provides for limited and controlled access from New Zealand (through carefully calibrated tariff quotas) for products such as beef, cheese, butter or milk powder. The inclusion in the Agreement of a chapter on sustainable food systems, which strengthens cooperation on issues such as animal welfare and the use of pesticides and fertilisers, is also significant.
The Agreement envisages the possibility to resolve any unfair trade practices between the Parties through trade defence instruments (anti-dumping, anti-subsidy, comprehensive safeguards). The Agreement also provides for a bilateral safeguard mechanism, which enables the EU and New Zealand to impose temporary measures if a significant increase in preferential imports causes, or threatens to cause, severe harm to domestic industries.
Among the points of particular sensitivity for Italy, New Zealand commits to protecting the entire list of Geographical Indications (GIs) submitted by the EU for wines and spirits and iconic European GIs in the agri-food sector, with the possibility of adding new GIs in the future. The total number of protected Italian GIs is 579. The use of the term “parmesan cheese” will only be allowed for producers who have been in the New Zealand market for more than 5 years and provided that consumers are not misled and confused about the origin of the product. The protection of GIs will become effective when the Agreement enters into force.
Besides tariff liberalisation, the FTA provides for further possibilities to facilitate trade, such as the prohibition of export duties and taxes, duty-free treatment of repaired and reconditioned goods, and recognition of the “Made in EU” label.
In order to benefit from the Agreement, products exported from the EU shall be considered as originating in the EU, i.e. obtained entirely in the EU (or produced in the EU exclusively from materials originating in the EU or New Zealand) or manufactured in the EU, also incorporating materials that do not originate in the EU or New Zealand, provided that such materials have been sufficiently worked or processed in the EU.
With specific reference to non-tariff measures, the Agreement contains chapters on Sanitary and Phytosanitary (SPS) issues and on Technical Barriers to Trade (TBT) that aim to facilitate trade and market access, while safeguarding adequate levels of protection. In the SPS area, for example, cooperation on antimicrobial resistance is foreseen and the precautionary principle is reaffirmed.
The FTA also includes comprehensive provisions on intellectual property, covering industrial design, copyright, resale rights for graphic designers, plastic arts and geographical indications.
The FTA also aims to promote investment between the EU and New Zealand by ensuring that EU investors in the other Party’s territory are treated in the same way as New Zealand’s investors. The EU and New Zealand have also made a number of commitments that go beyond normal business practice: with a few limited exceptions, no specific conditions will be imposed that would limit investment possibilities, nor will nationality requirements be imposed for specific key positions in companies owned by the other Party.
With regard to public procurement, the Parties will open their markets with commitments going beyond what is already envisaged in the WTO’s Public Procurement Agreement, allowing participation of the other Party’s bidders on an equal footing with its own ones.
With specific reference to trade in services, the provisions of the Agreement provide European service providers with a level playing field with New Zealand service providers in areas such as delivery services, telecommunications, maritime transport and financial services, with provisions for the movement of professionals (and their families) for business purposes.
With regard to digital trade, the Agreement provides legal certainty for businesses and a secure environment for consumers. It facilitates cross-border data flows, and prohibits unjustified data localisation requirements, while preserving the EU’s data protection policy space.
The EU-New Zealand FTA is also the first EU trade agreement to incorporate the EU’s New Approach to Trade and Sustainable Development, with binding commitments to comply with international labour and environmental standards, including the Paris Agreement on Climate Change and the International Labour Organisation’s (ILO) Fundamental Principles and Rights. The chapter on trade and sustainable development includes a provision on gender equality; an article on the reform of fossil fuel subsidies; provisions for the removal of tariffs on “green goods” and the liberalisation of environmental services; provisions on the circular economy, deforestation, the carbon price mechanism for CO2 emissions and the protection of marine environment.
Finally, the Agreement recognises the importance for all New Zealanders, including the Māori people, to benefit from the trade and investment opportunities provided by the FTA. For the EU, this is the first trade agreement to include a chapter dedicated to indigenous peoples.
For more information on the Agreement: EU-New Zealand (europa.eu)