The impending free trade deal between New Zealand and the European Union is expected to boost goods trading by close to 50%, according to an impact assessment.
And both negotiating parties are looking to make the agreement a “blueprint” for future free trade agreements (FTAs) around the world.
On Thursday, EU Commissioner for Trade Cecilia Malmström and Minister for Trade and Export Growth David Parker officially launched (FTA) negotiations.
New Zealand has been looking to hammer out a deal for years and Thursday’s announcement comes off the back of the EU launching similar talks with Australia earlier in the week.
At a media conference in Parliament, Parker and Malmström were upbeat about the prospects of an FTA between the two trading blocks.
Last year, two-way trade was valued at $NZ21.5 billion ($NZ16 billion excluding the UK) – trade with the EU makes up 10% of New Zealand’s total exports.
Malmström says the deal will work to facilitate even more trade as well as creating more jobs and widening consumer choices in both the EU and New Zealand.
“[The deal] is economically important – we have made an impact assessment and overall, trading goods between us could increase by almost 50%, if we have an ambitious agreement,” she says.
This will come through reduced tariffs in some areas, as well as reducing trading obstacles such as red tape, bureaucracy, difficult procedures to get a certificate and licences.
"If we can facilitate this, while defending the very high level of consumer protection that we both have, I think this is an excellent thing,” Malmström says.
Although the impact on services won’t be quite as high, she says there will still be an increase in this area.
It is likely issues around agriculture, particularly dairy, will be one of the major sticking points in the negotiations.
EU countries have traditionally been worried about the impact of any FTAs on their agriculture sector.
Malmström says she does expect this to be an area of “sensitivity,” but this is not unusual.
“In all negotiations I have been involved with, during my time as Trade Commissioner, agriculture has always been the difficult thing in the end, because it is sensitive for many countries.”
But she says there have been a series of ambitious and, for some countries, painful reforms, in the EU’s agricultural policy.
When it comes to negotiations around this issue, she says there is “give and take.”
“We are very well prepared. We have spent a lot of time going through the elements and the parameters of the negotiations.”
A blueprint for other FTAs
Both Parker and Malmström are optimistic about areas of the deal that will look to bolster sustainable development in environmental and labour rights.
“The World Trade Organisation (WTO) is not up to it, so we need to set new standards,” Malmström says.
“With the high standards you have here and the ambitions of the Government, I’m looking forward to these discussions.
“I think we can lead the way and actually make a blueprint here that can inspire others.”
“It’s one of the most exciting things for me, that we can not only do good for ourselves but also set out rules that are a guide to how other trade agreements should look for the benefit of the world.
“Through this agreement, I think that we won’t just be improving our economies, but we will be making the world a better place.”
The first formal round of negotiations between the respective sides' teams of negotiators will take place in Brussels from 16 to 20 July.