New Zealand has agreed in principle to the UK's second free trade deal since Brexit and for many exporters, it couldn't come at a better time.
Tariffs on New Zealand dairy, sheep meat and beef exports to the UK will gradually be phased out, under the terms of new free trade deal announced this week. Photo: 123rf
The agreement promises one billion dollars for our economy and is a shot of great economic news in the middle of an otherwise tough week.
Executive director of the industry group ExportNZ, Catherine Beard, told Morning Report the UK wanted to forge ahead with an independent trade policy following Brexit and New Zealand had benefited from that.
"It's always really difficult for New Zealand to pull off good quality free trade deals; we're a very small economy, there's often not much for it in the country that's doing the deal with us.
"We really need the planets to align on some bigger reasons to do it and I think that's definitely happened in this case" - ExportNZ executive director Catherine Beard
Beard agreed that New Zealand lending its support to the UK in its bid to join the larger Asia-Pacific Comprehensive and Progressive Trans Pacific Partnership (CPTPP) likely helped get the bilateral trade deal across the line.
"The timing's been great and it feels like a return to old friends, really."
The new agreement - just the second such deal the UK has signed since Brexit - will eventually eliminate tariffs on all New Zealand exports including honey, wine, kiwifruit, onions, most industrial products, beef and - most crucially - dairy products.
It will be five years before tariffs are completely removed from dairy products, and 15 years for sheep meat and beef, but Fonterra's chief executive Miles Hurrell told Morning Report that wasn't a long time to wait in the grand scheme of things.
"We're 150 years old as an industry this year, so five years is nothing in the way we operate."
The UK currently bought one percent of Fonterra's products, compared with China which accounted for a third of its market, Hurrell said.
"With this opening up it'll give us an opportunity to assess that [UK] market, see if there are opportunities there.
"We'll obviously move products to where the returns are and on the face of it, the UK looks good" - Chief executive officer of Fonterra, Miles Hurrell
In addition to the trade of agricultural and dairy products, the deal covers environmental concerns, telecommunications, the Treaty of Waitangi, intellectual property and more.
British High Commissioner to New Zealand, Laura Clarke, acknowledged the deal would bind the UK more into the Asia-Pacific region and smooth the pathway towards it joining the CPTTP.
But not everyone in the UK was happy with the arrangement.
The National Farmers' Union president there has decried it, saying the British Government was asking British farmers to "go toe-to-toe with some of the most export-oriented farmers in the world".
Clarke said it was a time of enormous change for the UK's agricultural sector and farmers needed to be given time to adjust.
"We have put in specific safeguards to recognise those sensitivities in the UK ... that's why, in the agreement in principle, it foresees the quota on beef and sheep meat and dairy increasing gradually over time."
Given New Zealand and the UK had opposite seasons, there was opportunity for food producers from both nations to co-operate and sell into third markets, Clarke said.
"The world needs more and more food, the global middle class is growing all the time" - British High Commissioner to New Zealand, Laura Clarke
The deal is expected to be ratified over the coming months.