UK-New Zealand trade pact ‘expected in days’ affecting meat, wine and jobs

The UK is on the brink of signing a trade agreement with New Zealand which is expected to mirror Britain’s controversial deal with Australia over agricultural imports, The Independent can reveal.

Two people familiar with the negotiations expect an agreement in principle, which is a commitment made ahead of signing a trade pact, to land next week.

There are final hurdles to clear on sensitive areas such as the phasing out of some quotas and tariffs on meat and dairy imports, according to a different trade department insider. But these are likely to be tackled in phone calls scheduled for the next couple of days, they said.

Diary invites have also been sent to some key business and advisory groups for briefings on Tuesday afternoon to discuss the detail of an agreement. These invites, seen by The Independent, state that sessions will provide an update on the pact “which is expected to be achieved and announced imminently”.

The language is similar to invites sent out to business groups when the announcement of the Australian agreement was made, but while that deal was agreed by prime minister Boris Johnson and his counterpart Scott Morrison in person, the choreography of an announcement will be different this time. Jacinda Ardern, New Zealand’s prime minister, is not expected to come to the UK until the UN Climate Summit Cop26 in Glasgow this autumn, at the earliest.

Yet one person familiar with the talks said they are optimistic that some final kinks will be smoothed out “within the next few days”, even if a formal announcement is made later on.

A trade department spokesperson said that talks were ongoing, but “we will not sacrifice quality for speed.”

“Both sides are committed to concluding a high-quality free trade agreement that will be a win-win for both countries. Negotiating teams have been accelerating talks to reach an agreement in principle and are making great progress, but we will not sign a deal unless it is right for British businesses and consumers,” the spokesperson added.

New Zealand’s economy is relatively small, and a trade deal is unlikely have a significant impact in terms of UK GDP. Total trade in goods and services between the two nations was £2.3bn last year, according to the British government.

However, as a wealthy, English-speaking country with close historical ties to the UK, there are a range of services industries that could benefit from the deal. Legal professionals are among those hoping to secure better market access, with a deal making it easier for them to practice in one another’s countries.

Labour mobility has been a sticking point in talks because of the hard-line stance New Zealand’s government has taken on border controls in response to the pandemic. Calculations used to determine the country’s visa provisions for Brits were thrown into question because the border has effectively been closed to most travellers and it is not expected to be reopened until 2022.

Still, people familiar with the talks are optimistic that a trade deal would open up business travel, reducing red tape, in non-pandemic times.

Agriculture is likely to prove the most controversial aspect of the deal, in the wake of controversy surrounding the agreement reached with Australia. This New Zealand deal is expected to mirror that with Canberra, largely lifting quotas and tariffs on meat imports within the next decade.

Cutting tariffs does not always result in goods becoming cheaper for consumers, but it can make a market more attractive for exporters. The UK government said last week that British products such as chocolate, gin and clothes could benefit from a 10 per cent reduction on import duties in New Zealand, under an agreement.

Meanwhile New Zealand’s wine exporters could see tariffs equivalent to 20 pence a bottle removed in the UK. However, retailers and suppliers might just absorb such a reduction in the face of mounting global cost pressures in sectors such as shipping.

More significant than the bilateral deal between London and Wellington is the need to maintain New Zealand’s support for the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The trade bloc of 11 nations includes Australia and New Zealand. Joining the trade group is a key part of the UK’s effort to diversify its trade activity away from the EU post-Brexit.

Joining the trade group is also part of a wider British security and defense effort to “tilt” towards the Asia Pacific amid growing concern over China’s geopolitical role.

Benefits from joining CPTPP are likely to be over the long, rather than short term, according to economists. So far official modelling, which relies upon historic data, has suggested a negligible immediate impact of a less than 1 per cent increase in GDP from joining the bloc.