A free trade agreement (FTA) with the United Kingdom, which goes into force today, is expected to provide major financial benefits to New Zealand firms.
The agreement’s start date was announced by Prime Minister Chris Hipkins, who cited it as one of the seven new or enhanced FTAs that the labor-led administration had so far successfully negotiated.
With inflation having peaked and expected to return to the target range next year, along with solid growth and an influx of people to solve skill shortages, Hipkins said in a statement that the economy has passed its worst point.
The prime minister stressed the trade agreement’s enormous economic benefits and projected a rise in GDP of up to $1 billion annually.
Businesses in New Zealand will immediately reap financial rewards. Since tariffs were instantly eliminated and new duty-free quotas covered 99.5% of current exports, Hipkins said, “New Zealand businesses will immediately save around $37 million dollars as a result of our earlier than expected implementation.”
The Prime Minister’s stance was echoed by New Zealand’s trade minister, Damien O’Connor, who emphasised the practical advantages of trade deals for common New Zealanders. “Trade agreements can occasionally feel more theoretical than practical, but that is only until the savings start to materialise, saving businesses millions of dollars and creating jobs for Kiwis,” said O’Connor.
O’Connor also mentioned the increase in export products covered by an FTA, which went from 52.5% to 73.5% since 2017. The minister emphasised the crucial part these agreements play in fosteringexport growth and supporting New Zealand businesses to overcome international trade challenges.
He highlighted how the UK FTA would alleviate cost pressures for exporters, expand opportunities for small businesses, and foster job creation during a cost-of-living crisis. “One in four jobs depend on trade – showing the importance of trade to our nation’s growing economy,” O’Connor stated.