The impact of a UK-New Zealand Free Trade Agreement: Introduction
In February 2022, the UK and New Zealand signed a comprehensive and far-reaching Free Trade Agreement (FTA). This is the second major FTA to be agreed post EU Exit after the one signed with Australia in 2021.
Both FTAs are with major agricultural exporting nations, and farmers may therefore be forgiven for wondering whether this presents yet another headache in the form of cheap imports to the UK market. In this series of Horizon articles, we look beyond the media headlines to consider the what the current trade is between New Zealand and the UK, the likely impact of this agreement, and what opportunities exist for UK farmers.
Free trade agreements ‒ one step in a larger process
International trade takes place based on supply and demand factors, and major exporting nations such as New Zealand are well practised at supplying and marketing the various products to the markets of greatest value. The view that lower costs of production in one nation will automatically result in a flood of exportable surplus arriving on UK soil is vastly oversimplified.
Free trade agreements, while they facilitate trade by generally lowering barriers, don’t suddenly create new demand or supply. The relationship-building throughout supply chains also takes time, and many countries will invest heavily in establishing these relationships before a trade deal is even mooted. The actual signing of the FTA is only one step in this process, albeit an important one.
How does AHDB add value for UK producers?
This long-term process is one in which AHDB is highly active. AHDB works tirelessly to drive commercial opportunities for our products on international markets. We support both industry and government in seeking and securing market access approvals, often over several years given the complexity of equivalence agreements, for our exporters. Exports markets were worth £1.45 bn to the beef, lamb and pork sectors in 2021.
We further work to turn access into trade through a range of market development activities in key global regions with representatives in the EU, Middle East , China, Japan, and the USA. These activities include trade show presence, trade press events and market insight, all aimed at raising awareness of the quality of our products and creating commercial opportunities with importers.
Once market access is granted, or when an FTA is agreed, AHDB examine the potential impact in order to ensure our levy payers are well informed with evidence-based information, to enable them to make informed business decisions. To this end we have been examining the new free trade agreements as they come to fruition. In November 2021 we examined the Australian FTA in detail in our report The impact of a UK-Australia free trade agreement on UK agriculture.
In this series of articles we examine:
- Key products traded between UK and New Zealand
- Differences between this and the FTA with Australia
- UK consumer perceptions towards New Zealand beef and lamb
- Animal welfare standards, and how New Zealand’s production methods compare to the UK’s
- Current global trade patterns, highlighting areas of the world with the biggest and fastest growing demand and the potential for New Zealand to increase supply to meet that demand
- New Zealand’s agricultural policies over time and their path to becoming a major agricultural exporter
- New Zealands’s production methods and how they compare to the UK’s
We also present economic modelling, in collaboration with Harper Adams University, of the impact of the new FTA on the UK and other major players. While the model is not a forecast, it examines the effect of the UK/New Zealand FTA not just on bilateral trade but on the existing trade networks. It also enables us to explore the effect of certain ‘what if’ scenarios, which is important in these times of geopolitical uncertainty.
We hope these articles shed light on the potential impact of this new trade deal, and equip you with the knowledge and information to enable you to navigate these challenging times. For more information, including blogs and podcasts on this topic, see our Trade and policy page.