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Trade

The EU-New Zealand agreement explained

The EU has negotiated a trade agreement with New Zealand.

Country or region
  • New Zealand
Trade topics
  • Negotiations and agreements

Context

Agriculture

Goods and Services

Sustainability

Accountability & Transparency

Context

Why has the EU negotiated an agreement with New Zealand?

To open meaningful economic opportunities for EU companies, farmers and consumers and to use this closer economic partnership to help protect the environment and labour rights.

Bilateral trade in goods between the two partners has risen steadily in recent years, reaching over €8 billion in 2021. The EU is New Zealand's third-biggest trade partner.

According to the impact assessment, trade between New Zealand and the EU could increase by 30%; trade in goods could increase by 47%, whereas the services trade could increase by 14%.

How big is the New Zealand market? How much trade does the EU do with New Zealand?

New Zealand is Oceania’s second largest economy. With a population of over 5 million and an annual GDP close to €200bn.

New Zealand also enjoys strong preferential trade links in the Asia Pacific. A trade agreement with New Zealand strengthens the EU’s position in the increasingly important and contested Indo-Pacific region, home to the largest source of GDP growth in the next decades, helping to support the 2021 EU Indo-Pacific Strategy.

EU firms exported to New Zealand:

  • €5.5bn of goods (in 2021), and
  • €2.6bn of services (in 2020)

What will the agreement with New Zealand achieve?

The agreement will deepen our trade and investment relations and provide new opportunities for business and farmers:

  • Eliminating tariffs on 100% of EU exports of goods and providing a level playing field for EU goods in the New Zealander market, which is expected to increase EU exports to New Zealand by up to 47 % over time.
  • Making it easier for EU companies to provide their services in New Zealand, including in delivery, telecommunications, maritime transport and financial services.
  • Ensuring EU investors in New Zealand are treated the same way as New Zealand investors, and vice versa.
  • Improved access for EU companies to New Zealand government procurement contracts for goods, services, works and works concessions.
  • Ensuring EU companies participate on equal footing with New Zealand ones in bids for procurement covered by the agreement, and vice versa.
  • Including a chapter on small and medium enterprises, to ensure that both EU and New Zealand small businesses fully benefit from the opportunities the agreement offers.
  • Providing that effective competition laws are maintained and implemented by operationally independent authorities in a transparent and non-discriminatory manner, in respect of rights of defence, as well as cooperation between the authorities.
  • Providing wide transparency and consultation mechanisms on subsidies granted while prohibiting the most harmful subsidies for trade and competition.
  • Ensuring the use of international standards, which reduces costs of compliance.
  • Allowing European companies to prove compliance with New Zealand technical regulations more easily by allowing conformity assessments to be carried out in the EU by recognised bodies, for certain sectors.
  • Comprehensive provisions on the effective protection and enforcement of IP rights to encourage innovation and creativity for our respective industries to stay competitive. 
  • Provisions on copyright, trademarks, industrial designs, geographical indications (GIs), plant varieties, undisclosed information, as well as solid provisions on IPR enforcement, including border measures as well as on the protection of Trade Secrets.
  • Confirming the possibility to deal with unfair trade between the parties and providing a bilateral safeguard mechanism in case preferential imports cause serious injury to the domestic industry.

Which EU sectors (industries) will benefit most from this agreement?

In goods:

  • Machinery
  • Chemicals
  • Motor vehicles and parts
  • Electrical and electronic machinery

In services:

  • Delivery
  • Telecommunications
  • Maritime transport
  • Financial services

How will European consumers benefit?

The agreement will create the conditions for European consumers to choose from a wider and more affordable range of products and services.

Both the EU and New Zealand will be to cooperate on market surveillance issues.

When did the negotiations start?

The negotiations were launched on 22 May 2018.

Agriculture

How will EU farmers benefit?

EU farming communities stand to gain from easier access to the New Zealand market and more opportunities to sell their produce due to tariff elimination.

Among others, New Zealand will liberalise at entry into force EU pigmeat, wine and sparkling wine, chocolate, sugar confectionary and biscuits.

How will the agreement protect sensitive EU agricultural products?

The agreement takes fully into account the interests of EU producers of sensitive agricultural products: several dairy products, beef and sheep meat, ethanol and sweetcorn. For these sectors, the agreement will allow zero or lower tariff imports from New Zealand only in limited amounts (through so-called Tariff Rate Quota). This strikes the right balance: New Zealand exports will not put at risk the EU market through unlimited imports in sensitive sectors. For example, the TRQ for beef is only 0.15% of EU consumption and the quotas negotiated for butter, cheeses and milk powder from New Zealand represent 0.71%, 0.27% and 1.30% of EU consumption respectively.

How will the agreement help EU food and drink producers market their distinctive regional products (Geographical Indications)?

The EU protects the names of specific food and drink products whose qualities are specifically linked to the area of production through the “Geographical Indications” (GIs) status. The GI recognition establishes an intellectual property right for these products’ names, helping producers to better market their products, sell them for a premium as well as enabling consumers to trust and distinguish high quality and authentic products.

The Agreement will protect the full list of EU wines and spirits (close to 2000 names) such as Prosecco, Polish Vodka, Rioja, Champagne and Tokaji. In addition, 163 of the most renowned EU food GIs, such as Asiago, Comté or Queso Manchego cheeses, Istarski pršut ham, Lübecker Marzipan, Elia Kalamatas olives will be protected in New Zealand.

The Agreement also foresees the opportunity to add more GIs in the future.

This would make it illegal to sell imitations. This means that the use of a GI term for non-genuine GI products will be prohibited and expressions such as ‘kind’, ‘type’, ‘style’, ‘imitation’ or the like will not be allowed. Furthermore, the agreement grants protection from misleading use of symbols, flags or images suggesting a "false" geographical origin. For example, no-one will be allowed to call cheese Roquefort unless it is the genuine cheese made in Roquefort, France, under specific production conditions.

The recognition and protection of EU GIs through the agreement will:

  • help European farmers, producers and exporters, and
  • reassure New Zealand consumers that they are buying a genuine European product.

How will the agreement protect European standards, including food safety standards?

As with all the EU's trade agreements, the agreement with New Zealand will not change European standards, including standards for food, agricultural and fishery products. EU standards are not negotiable.

EU stringent food safety rules will not change

  • The agreement does not affect or undermine EU food safety and animal and plant health legislation because health standards are not negotiable.
  • The EU keeps its strict approach on health protection for any food safety matter, including genetically modified organisms (GMO).
  • The EU maintains its right to set maximum levels of residues for pesticides, veterinary medicines or contaminants.

The EU remains free to regulate food safety

  • The EU remains fully independent in deciding safety criteria for products that reach its market.
  • The agreement reaffirms the EU’s right to regulate food safety in the interest of EU citizens' health.
  • The agreement reaffirms the 'precautionary principle', allowing the EU to take measures to protect the health of EU citizens when the scientific evidence on whether imported food is safe or not is inconclusive.

All imported food must comply with the EU’s standards

  • EU rules apply to all products sold in the EU, whether produced domestically or imported.
  • A robust system of checks allows the EU to make sure that its rules are respected.

Goods and Services

What will New Zealand get from the deal?

It will become easier for New Zealand to export to the EU, as long as they respect the EU’s high standards. All New Zealand's industrial goods exports to the EU will become tariff free, and most of its agricultural products, such as kiwifruit, apples or wine.

The trade deal will give more opportunities for New Zealand citizens to provide their services in the EU, including on a temporary basis through their physical presence in EU countries, including as contractual service suppliers or as independent professionals.

What will the agreement mean for trade in goods?

The agreement will eliminate tariffs on 100% of EU exports and provide a level playing field for EU goods in the New Zealand market, which is expected to increase EU exports to New Zealand by up to 47% over time.

What will the agreement mean for trade in services?

The agreement will make it easier for EU firms to sell their services to New Zealand, including in:

  • Delivery
  • Telecommunications
  • Maritime transport
  • Financial services

The agreement will reduce and eliminate discrimination and expand opportunities for EU and New Zealand service providers and investors.

It guarantees the right of EU Member States' authorities to maintain public services.

It will not force governments to privatise or deregulate any public service at national or local level.

Member States' authorities retain the right to return privately provided services to the control of the public sector.

Europeans will continue to be able to decide for themselves how they want critical services such as healthcare, education and water to be delivered, for example.

What will the agreement mean for digital trade?

It will facilitate digital trade, by addressing unjustified barriers, and ensuring an open, secure and trustworthy online environment for businesses and consumers, along with high standards of personal data protection. It notably prohibits data localisation requirements, while preserving the EU's policy space regarding the protection of personal data.

What will the agreement mean for investments?

  • It will ensure EU investors in New Zealand are treated the same way as New Zealand investors.
  • EU and New Zealand investors will be able to establish their companies and operate them freely, in their respective territories.
  • Investments made by EU investments will be screened in New Zealand under the same condition as other investors with whom New Zealand has concluded trade agreements.

How will the agreement help small businesses?

The agreement will make doing business easier when they export or import goods and services, invest or work together with New Zealand.

A dedicated chapter for small and medium-sized enterprises (SMEs) will allow for a better information exchange and fruitful cooperation with New Zealand on SME-related issues.

This includes enhanced information for SMEs on how to access New Zealand market and vice versa, as well as an institutional set-up that will address any matter of interest to SMEs in connection with the implementation of the agreement.

The EU and New Zealand also share the objective of providing efficient custom procedures to traders, in particular to smaller entities. Adequate provisions ensuring transparency of the legislation, forms, procedures needed to be complied with at border, easy access to information on applied tariffs, access to contact points in case of enquiries, and consultation of business prior to adoption of new customs legislations are only a few elements of the Customs and Trade Facilitation chapter that in many aspects provides WTO TFA PLUS commitments of the Parties.

Tariff elimination, simplified and digitised customs procedures and more compatible technical requirements will lower export related costs and allow SMEs with lower trade volumes to compete with larger companies.

This also enhances SMEs' ability to participate in supply chains, e-commerce and public procurement and to provide services on the New Zealand market.

Finally, SMEs that find that their goods are frequently held up at the border, or which struggle to meet local licensing requirements for service delivery, can raise these problems with their own governments, which can then utilise the government-to-government committees to push for improvement.

The agreement also promotes transparency and the use of international standards to facilitate market access and lower costs of compliance.

How will the agreement further open New Zealand's government procurement market?

The agreement will make it easier for European firms to bid for government contracts in New Zealand. The agreement will do this in two ways:

  • The agreement contains important new market access commitments concerning procurement; until now, there was no legal guarantee that EU could participate in this field on an equal footing with local suppliers and service providers.
  • It will also make the tendering process more transparent. The parties have agreed that the publication of contract notices and tender documents online at a single electronic portal for procurement and the possibility to submit bids electronically are now the procedural standard for both sides.

What are the key provisions on rules of origin?

  • Products that are wholly obtained in either party (by agriculture, mining, fishing etc) qualify as originating as well as products containing foreign inputs as long as they meet specific requirements for local production called product specific rules.
  • Materials from New Zealand can be counted as originating in the EU and vice versa, as well as any processing that has been done on non-originating materials in either party. This is called full bilateral cumulation.
  • For products not meeting the product specific rules there is an additional tolerance of 10% in value for all products except for textiles and clothing which have a special tolerance.

Which reference number will be used in statements on origin made out by New Zealand exporters?

Commercial entities in New Zealand will use their customs client codes for their statements on origin. A client code is required for shipments valued at NZ$ 1,000 or more. The client code is an 8-digit number followed by one letter, for example: 12345678A. For further information see: Client codes - New Zealand Customs Service

Sustainability

How will the agreement promote sustainability?

The EU-New Zealand trade agreement is the EU’s first trade agreement which:

  • Integrates the EU’s new approach under the “Trade Agreement for Green and Just Growth” plan.
  • Includes sanctionable commitments to the Paris Agreement and core ILO labour standards.
  • Has a dedicated trade and gender equality article in its TSD chapter.
  • Has a dedicated provision on trade and fossil fuel subsidies reform.
  • Removes tariffs on green goods and liberalises services at entry into force.
  • Has novelty provisions on the circular economy, deforestation, carbon pricing and the protection of the marine environment.

How will the agreement contribute to the fight against climate change?

Under the agreement, the EU and New Zealand commit to effectively implementing the United Nations Framework Convention on Climate Change and the Paris Agreement on climate change. The commitment to respect the Paris Climate Agreement is subject to trade sanctions in case of material breaches. 

They also commit to promoting trade’s positive contribution to the fight against climate change.

How will the agreement contribute to gender equality?

The agreement has a dedicated article on Trade and Gender equality in the TSD chapter, a first for an EU trade agreement, and will address several aspects:

  • Commitment to effectively implement the relevant UN and ILO conventions that address gender equality or women’s rights, including the Convention on the Elimination of all Forms of Discrimination Against Women,
  • Commitment not to weaken or reduce the levels of protection nor to waive or otherwise derogate from its laws aimed at ensuring gender equality or equal opportunities for women and men, in order to encourage trade or investment
  • Priority areas for sharing of information and joint initiatives, such as policies on maximising positive impacts of women's participation in trade

How will the agreement uphold workers' rights in both the EU and New Zealand?

Both the EU and New Zealand have strong laws protecting workers' rights.  They have agreed that the trade deal between them must support existing rights and not lead to reducing or diluting them and to this objective, the agreement prohibits either side from unduly encouraging trade and investment by:

  • Weakening their respective labour laws
  • Derogations or waivers from labour laws
  • Not enforcing labour laws.

The two sides have also agreed to ensure that core labour rights as defined by the International Labour Organisation (ILO) are respected. These concern:

  • Freedom of association and the effective recognition of the right to collective bargaining
  • The elimination of all forms of forced or compulsory labour
  • The effective abolition of child labour
  • The elimination of non-discrimination in respect of employment and occupation.

Moreover, the TSD chapter requires the effective implementation of all the International Labour Organization (ILO) conventions that each party has ratified and commits them to continued efforts to ratify the fundamental ILO conventions not ratified yet.

In addition, the Parties also agreed robust commitments on decent work, including on labour inspection, social dialogue and on health and safety at work, in line with ILO standards.

Welcoming the ILO’s June 2022 decision by which safety and health is added to Fundamental Principles and Rights at Work, the two sides set a joint process to add this new principle to the agreement.

What about the agreement's impact on the environment?

Mirroring the approach on the labour commitments, The EU and New Zealand have agreed that the trade deal between them must support existing international environmental standards and not lower or dilute the environmental protections provided on each side. They have also agreed that each side has the right to regulate in order to protect the environment.

Both sides have agreed to effectively implement the Multilateral Environmental Agreements (MEAs) that each party has ratified, such as the Paris Agreement on Climate Change and the Convention on Biological Diversity, or the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).

The TSD Chapter includes further provisions on the fight against climate change and the transition to a sustainable low-carbon economy. It also identifies potential areas where trade and environmental agendas can reinforce each other such as: the conservation and sustainable management of biological resources, forests, and fisheries; the promotion of trade in legally harvested and sustainable products. The novelty cooperation obligations encourage the shift to a circular and resource-efficient economy, and deforestation-free supply chains.

Moreover, also in line with the European Green deal, a first dedicated article on fossil fuel subsidies (FFS) in an EU trade deal, that reflects the common goal of progressively reducing FFS and the EU and NZ agree to work together on reforming fossil fuel subsidies, in particular through the WTO.

Will the commitments on workers' rights and environmental protection (sustainable development) be enforceable?

TSD commitments are legally binding and enforceable through the agreement’s general dispute settlement, with an independent and transparent review by a panel of experts, and the active involvement of civil society. This approach is based on engagement and addresses emerging concerns through dialogue and cooperation.

The Commission now proposes to further align TSD enforcement with the general state-to-state dispute (SSDS) settlement and to extend the compliance stage to disputes under the TSD chapter. This means that the party found in violation of its TSD commitments will have to promptly inform on how it will implement the panel report, and carry this out within a certain period of time. This will be subject to panel review. Civil society will be able to submit observations to the panel also at this stage.

Moreover, for the first time in the EU trade agreement, the TSD chapter foresees the possibility of trade sanctions as a matter of last resort, in instances of serious violations of core TSD commitments, namely the ILO fundamental principles and rights at work, and of the Paris Agreement on Climate Change, regardless of their impact on trade.

How will the agreement help promote sustainable food chains in both regions?

The agreement has a dedicated chapter on Sustainable Food Systems and Animal Welfare, which will address several aspects:

  • The EU and New Zealand have agreed to cooperate more closely on animal welfare standards.
  • The EU and New Zealand have committed to take initiatives to phase out the use of antimicrobial agents as growth promoters and to reduce the use of antimicrobial agents in animal production.
  • The EU and New Zealand have also agreed to cooperate on food loss and waste, pesticides and fertilisers, and ensuring the security and resilience of food supply chains.

Does the agreement contain a reference to the precautionary principle?

The agreement reaffirms the principles of the WTO SPS Agreement, including the 'precautionary principle', meaning that public authorities have a legal right to act to protect human, animal or plant health, or the environment, in the face of a perceived risk even when scientific analysis is not conclusive.

How will the agreement safeguard governments' right to regulate in the public interest?

Both sides will continue to have the right to determine their sustainable development policies and priorities, to establish the levels of domestic environmental and labour protection they deem appropriate and to adopt or modify its relevant law and policies.

Both sides shall strive to ensure that their policies provide for high levels of environmental and labour protection.

They will not weaken or reduce the levels of protection under their environmental or labour laws in order to encourage trade or investment.

Accountability & Transparency

How much control do elected governments and MEPs have over the whole process?

The European Commission negotiated on behalf of the EU in line with a mandate granted to it by the governments of the EU's 27 Member States.

The Commission has always ensured that the negotiation process is accountable to EU Member States and to the European Parliament.

The EU Commissioners concerned, as well as the Commission negotiators and services:

  • Work together with EU Member States to prepare the negotiations and negotiating texts.
  • Report back to Member States meeting in the Council on how the negotiations are going.
  • Keep the European Parliament updated of developments.
  • Appear before the European Parliament's International Trade Committee.

How has the Commission ensured that everyone can follow what is happening in the talks?

Throughout the negotiations, the Commission has regularly met, informed and shared information with:

  • EU Member State governments
  • The European Parliament
  • Civil society organisations

On its website, the Commission has published dedicated pages with links to:

  • Reports of negotiating rounds
  • Texts of EU proposals submitted to New Zealand
  • Press releases
  • Factsheets in plain English
  • Other background information about the negotiations

The Commission also:

  • Holds press conferences with journalists.
  • Shares information via social media, such as Twitter.

Has the Commission evaluated the impact that this agreement could have on the EU and New Zealand?

The EU commissioned an independent Sustainable Impact Assessment (SIA) on these negotiations. SIAs analyse the potential economic, social, human rights and environmental impact of trade agreements being negotiated by the EU. They are based on a robust analysis of the changes that are likely to be caused by the trade agreement in the EU, the partner country and developing countries. Equally important, they include wide-ranging consultations of stakeholders in the EU and the partner country. SIA findings and recommendations feed into the negotiations, helping negotiators to optimise the related policy choices.

The SIA has been published together with a Commission Services’ Position Paper.

The EU also commissioned an independent Impact assessment study on the negotiations.

How did the Commission ensure that it listened to everyone with a stake in the agreement?

The Commission regularly reports back to the governments of the EU's Member States and keeps the European Parliament informed of progress in the negotiations.

The European Commission has also held four meetings with representatives of many of the 460+ civil society organisations registered with its ongoing dialogue on trade policy.

These EU-based, not-for-profit organisations include:

  • Trade unions
  • Consumer bodies
  • Employers' federations
  • Business federations
  • Farming organisations
  • Environmental organisations
  • Animal welfare organisations
  • Faith-based groups
  • Think tanks
  • Community-based groups.

These meetings enable a wide range of bodies to make their views heard and to comment on the negotiations. At the meetings, the Commission informs and updates civil society on the negotiations.

In 2015, the European Commission issued new guidelines for transparency. Since then, the Commission has made public all new negotiating papers tabled in the talks.

The European Commission's doors are open. Any organisation interested in the talks can meet officials to put forward their views and opinions.

What happens next?

Shortly after the conclusion of the negotiations, the negotiated draft texts will be published. These texts will go through legal revision (‘legal scrubbing’) and be translated to all official EU languages. Following that, the European Commission will submit the agreement for signature and for conclusion to the Council. Once adopted by the Council, the EU and New Zealand sign the agreement. Following the signature, the text is transmitted to the European Parliament for consent. After the consent by the Parliament, and once the Council decides to conclude the agreement and New Zealand also ratified it, the agreement can enter into force.