Do you run a business in New Zealand with aspirations to export overseas? Have you ever wondered what international free trade agreements (FTAs) might mean for your organisation? As businesses continue to look abroad for new opportunities, understanding the impact of free trade agreements is essential. In this blog, we’ll explore how these deals can prove beneficial when shipping across borders and how they represent potential sources of new revenue growth.
What is a free trade agreement (FTA)?
Free trade agreements (FTAs) refer to a set of rules and regulations that aim to eliminate or reduce trade barriers between two or more countries. These agreements are often negotiated and signed by governments with the goal of promoting economic growth and increasing international trade. This means that the parties involved in the FTAs agree to lower tariffs on goods and services, remove trade barriers and regulations, and facilitate the movement of goods and people across borders. By entering into these agreements, countries hope to increase trade volume and improve their economic prosperity. As a result, free trade agreements have become an increasingly popular tool for promoting global trade and economic progress and are now in place between many countries around the world.
FTAs with Key Export Partners of New Zealand
1. Free trade agreement between New Zealand and China
The free trade agreement between New Zealand and China, signed in 2008, paved the way for stronger economic ties between the two nations. As two major players in the Asia-Pacific region, the agreement has created opportunities for businesses to expand their markets and increase profitability. In the year ending June 2022, China continued to maintain its position as the primary trading partner of New Zealand, with a two-way goods and services trade valued at NZ$38.5 billion. During this time, China was the largest export market (NZ$20.9 billion) and import market (NZ$17.6 billion) for New Zealand, as indicated by the New Zealand Ministry of Foreign Affairs and Trade. With over a decade of successful implementation, the free trade agreement between NZ and China has served as a model for others seeking to establish mutually beneficial trade partnerships.
2. New Zealand’s free trade agreement with Australia
New Zealand and Australia's economic partnership has a longstanding history. The Australia-New Zealand Closer Economic Relations (CER) Trade Agreement was signed in 1983, marking the beginning of a close economic alliance between the two countries. In 2009, the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) was established, further strengthening trade relations between the nations. With the New Zealand free trade agreement with Australia in place, both countries have seen significant benefits in terms of economic growth and increased job opportunities. According to Stats NZ, the total annual goods exports from New Zealand to Australia increased by 17% to NZ$797 million by December 2022. This partnership has proven to be a valuable asset to both nations as they continue to work together towards achieving sustainable economic success.
3. Possible free trade agreement between New Zealand and the United States
The free trade agreement (FTA) between New Zealand (NZ) and the United States (US) has been a long time coming, but the two countries have yet to sign an agreement. The US is one of NZ's largest trading partners, and an FTA would provide significant benefits to businesses in both countries. In fact, the United States imports from New Zealand reached US$5.63 billion during 2022, as reported by the United Nations COMTRADE database on international trade. With negotiations for an FTA in the works, there is hope that an agreement will be reached in the near future.
