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World trade: goodbye to tariffs: free trade agreement between the EU and New Zealand

World trade: goodbye to tariffs: free trade agreement between the EU and New Zealand

The Pacific state of New Zealand is an important partner for the EU despite the huge distance. A new agreement is expected to further boost trade from this Wednesday. The expectations are high.

As of today, the EU and New Zealand are linked by a new, far-reaching free trade agreement. The agreements, which came into force on May 1st, provide for the almost complete elimination of tariffs.

According to previous information from the EU Commission, taxes for EU companies are expected to decrease by around 140 million euros annually. Overall, bilateral trade is expected to grow by up to 30 percent within a decade. EU exports to the country in the southwest Pacific are expected to increase by up to 4.5 billion euros annually.

Special rules for farmers in the EU

In order to take into account the interests of European agriculture, some dairy products, beef and sheep meat, ethanol and sweet corn, among others, were excluded from trade liberalization. Instead, according to the Commission, only limited quantities of duty-free imports or imports with lower duty rates from New Zealand are permitted through so-called tariff quotas.

The agreement is also considered the EU’s first to implement a new approach to sustainable development. It even allows for sanctions in the event of serious violations of fundamental labor law principles or climate policy obligations under the Paris Agreement.

DIHK hopes for further agreements

The German Chamber of Commerce and Industry welcomes the entry into force of the trade agreement as a “ray of hope in an increasingly difficult foreign trade environment”. German companies worldwide are suffering from protectionism, which is putting ever greater obstacles in the way of foreign trade, commented DIHK foreign trade chief Volker Treier.

The new agreement could help to take countermeasures because it removes trade barriers. The EU must now work towards opening up more markets in the region – for example through trade agreements with India, Indonesia, Thailand, the Philippines, Malaysia and Australia. The German trade volume with the entire region amounts to over 500 billion euros – one sixth of German foreign trade.

According to the Foreign Office, New Zealand’s most important export goods to Germany are agricultural and forestry products such as sheep and game meat, fruit, dairy products and wool. From Germany, vehicles, machines and pharmaceutical products are primarily imported into the country, which has a population of around 5.1 million.

More than 18,000 kilometers from Berlin to Wellington

According to data from the Federal Statistical Office, Germany was recently New Zealand’s most important trading partner within the EU. For the Federal Republic, trade with New Zealand was in 62nd place in a global comparison in 2023, with exports worth around 1.6 billion euros. The distances also make trade relations difficult. For example, it is more than 18,000 kilometers as the crow flies from the German capital Berlin to the New Zealand capital Wellington.

Source: Stern

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