Key elements of the EU-New Zealand trade agreement

On 30 June 2022, the European Union and New Zealand concluded their four-year negotiations on an ambitious trade agreement.

The current EU bilateral trade with New Zealand already totals €7.8 billion a year for goods and €3.7 billion for services. The EU exports to New Zealand goods worth €5.5 billion a year and imports New Zealand products of €2.3 billion resulting in a trade surplus for the EU of €3.2 billion.

When it comes to services, the EU exports more than twice as much as it imports: €2.6 billion of services supplied by EU firms to clients in New Zealand versus €1.1 billion in services delivered to EU clients by firms from New Zealand.

EU exporters will gain from immediate tariff removal that will bring European companies yearly savings to more than €140 million.

1. Trade in goods

The agreement remove duties on all EU goods exports to New Zealand at its entry into force. For example, New Zealand will remove high duties on industrial products, such as:

• Cars and motor vehicle parts (current tariffs up to 10%)
• Machinery (current tariffs up to 5%)
• Chemicals (current tariffs up to 5%)
• Clothing (current tariffs 10%)
• Pharmaceuticals (current tariffs up to 5%)
• Shoes (current tariffs up to 10%)
• Textiles (current tariffs up to 10%)

The agreement will also on entry into force eliminate duties on EU food and drink exports, such as:

• Swine meat (current tariffs 5 %)
• Wine and sparkling wine (current tariff at 5%)
• Chocolate, sugar confectionary and biscuits (current tariff at 5%)
• Pet food (current tariffs at 5%)

The agreement will also eliminate or substantially reduce EU duties on most New Zealand goods exported to the EU.

2. Rules of Origin

The EU and New Zealand has agreed rules of origin that ensure that products that have been significantly processed in one of the parties can benefit from the tariff preferences of the agreement. This ensures that the benefits of the agreement accrue to products made in the EU and New Zealand and not those made in third countries.
The documentation on origin follows the latest standard based on self-certification by businesses to make the utilisation of the agreement as easy as possible, especially for Small and Medium sized companies. The verification of the origin is based on contacts to the importer by local customs and may be followed by administrative cooperation between the customs authorities of the EU and New Zealand.

3. Customs and Trade Facilitation

The EU and New Zealand share the objective of providing efficient custom procedures to traders, in particular to smaller entities, with adequate provisions ensuring transparency of the legislation, forms, procedures needed to be complied with at border, easy access to information on applied tariffs, access to contact points in case of enquiries and consultation of business prior to adoption of new customs legislations. 

4. Trade Remedies

The agreement confirms the possibility of dealing with any unfair trade between the parties by using the trade defence instruments (anti-dumping, anti-subsidy, global safeguards). The agreement also includes a bilateral safeguard mechanism, which allows the EU and New Zealand to impose temporary measures in case a significant increase of preferential imports causes, or threatens to cause, serious injury to their domestic industry.

5. Sanitary and phytosanitary measures

The ambitious chapter on Sanitary and Phytosanitary (SPS) matters, which covers food safety, animal and plant health, Antimicrobial resistance (AMR) and fraud in traded commodities will uphold our highest standards. Nothing in the agreement changes the way the EU adopts and enforces its food safety rules, be it for domestically produced or imported products.
The agreement reaffirms the principles of the WTO SPS Agreement, including the 'precautionary principle', meaning that public authorities have a legal right to act to protect human, animal or plant health, or the environment, in the face of a perceived risk even when scientific analysis is not conclusive.
The EU and New Zealand will reinforce joint work on SPS matters to ensure rapid intervention in emergencies related to imports and exports of agriculture and fishery products. Among other things, this will include increased transparency, fast information exchange and technical consultations, bilateral and international cooperation in key areas, official controls and certification as well as border import checks.

6. Sustainable food systems

The EU and New Zealand will cooperate on strengthening policies and defining programmes that contribute to the development of sustainable, inclusive, healthy and resilient food systems and to jointly engage in the transition towards sustainable food systems.

7. Animal Welfare

The EU and New Zealand undertake to cooperate bilaterally and internationally to promote the development and implementation of scientifically based animal welfare standards.

8. Technical Barriers to Trade

Different technical regulations and standards on products in other markets can create trade barriers and increase costs of compliance.

The agreement promotes transparency and the use of international standards to facilitate market access while safeguarding the levels of protection that each party deems appropriate. It will be easier for EU companies to prove compliance with New Zealand technical regulations as conformity assessments can be carried out in the EU by recognised bodies for certain sectors.

New Zealand has agreed to accept EU type-approval certificates for motor vehicles. Many categories of motor vehicles approved in the EU will not need further certification before entering the New Zealand market.

Marking and labelling requirements may also be carried out in the territory of the importing party, and both sides can cooperate on market surveillance issues.

The Wine and Spirits Annex will considerably facilitate trade between two partners with flourishing wine industries on both sides on a highly regulated and competitive market. It provides a platform that promotes standards in wine production and labelling, and considerably increase the convergence of those standards. The successful conclusion of this Annex paved the way for protection of all EU wines and spirits GIs in New Zealand and all NZ wine GIs through this Agreement.

9. Investment liberalisation and trade in services

Each year, the EU exports more than €2.6 billion in services to New Zealand.

The agreement will make it easier for EU firms to provide services to New Zealand and open opportunities to invest in both services and manufacturing sectors. It will ensure a level playing field between EU service providers and their competitors in New Zealand.

The services covered include a wide range of sectors and sector-specific regulatory provisions exist for delivery services, telecommunications, financial services and international maritime transport services.

The agreement also contains advanced provisions on the movement of professionals for business purposes, such as managers or specialists that EU companies post to their subsidiaries in New Zealand and their family members. 

The agreement aims to promote investment between the EU and New Zealand. At the same time, the text explicitly reaffirms the right of each party to regulate to pursue legitimate policy objectives, highlighted in a non- exhaustive list. The agreement does not cover the protection of investments.

10. Digital Trade 

The agreement will ensure predictability and legal certainty for businesses and a secure online environment for consumers who engage in digital trade transactions across borders and will remove barriers and prevent discrimination between online and offline activities.

It will facilitate cross-border data flows by providing a prohibition of unjustified data localisation requirements while preserving a high level of personal data and privacy protection in the EU that is an important contributor to trust in the digital environment.

It also includes ambitious articles on the protection of source code the use of e-contracts and e-invoicing or paperless trading.

11. Capital movement, payments and transfers and temporary safeguard measures

This chapter states that if a certain transaction is liberalised under the agreement (e.g. the establishment of a foreign direct investment enterprise) then the money necessary for the transaction must be transferred as well (e.g. the contribution of the investor to the capital of the foreign affiliate, payments in relation to other transactions, such as trade in goods). Otherwise, the liberalisation commitment could be undone. At the same time this chapter allows both sides to take measures if needed, when applying its laws and regulations for example in relation to bankruptcy, trading or dealing in securities.

12. Government procurement

The EU and New Zealand will reciprocally open up their procurement markets beyond what is already covered under the WTO Government Procurement Agreement (GPA). New Zealand will allow EU companies to tender, on an equal footing with local companies, for contracts with all public authorities whose procurement is regulated by the NZ Procurement Rules. This comprises all central government ministries as well as Crown Agents, Autonomous Crown Entities, Independent Crown Entities, Crown Entity companies, and Public Finance Act Schedule 4A Companies.

Importantly, the procurement of local authorities in respect of procurement related to transport projects funded in whole or in part by the New Zealand Transport Agency will also be covered, including the procurement of Auckland Transport, New Zealand’s most important provider of public urban transport services.

In return, the EU has opened for New Zealand suppliers and service providers the procurement of all goods and services by central government authorities that had not yet been covered under the GPA, the procurement of health-related goods (pharmaceuticals and medical devices) by regional government entities, and the procurement of public utility providers operating in the fields of ports and airports.

13. Anticompetitive conduct and merger control

The EU and New Zealand agreed that effective competition laws are to be maintained in both jurisdictions, which are implemented by operationally independent authorities. These authorities are to act in a transparent and non-discriminatory manner, respecting the rights of defence. The agreement also foresees cooperation between the authorities.

14. Subsidies

The EU and New Zealand recognise that certain subsidies may distort the proper functioning of markets and harm the environment, and to that end agreed that in principle no subsidies that negatively affect competition or trade or harm the environment should be granted. Furthermore, the EU and New Zealand agreed on a comprehensive transparency mechanism by which subsidies granted to both goods and services providers should be made public. 

Additionally, they have agreed on a consultation mechanism that will allow one Party to raise their concerns in case a subsidy is likely to negatively affect trade. Finally, and most importantly, the EU and New Zealand agreed to prohibit certain type of distortive subsidies, namely unlimited guarantees and subsidies to insolvent enterprises in the absence of a restructuring plan.

15. State-owned enterprises

The agreement sets out binding rules on the behaviour of State-owned enterprises, designated monopolies and enterprises granted exclusive or special privileges (“SOEs”). The rules ensure a level playing field by requiring the SOEs to act according to commercial considerations and non-discrimination. This means that the buying and selling decisions of the SOEs must be commercially motivated, according to market economy principles in a way that a privately owned enterprise would act.

Without effective rules on SOEs, market access could in effect be undermined, since the SOEs could otherwise favour domestic suppliers or customers and cause distortions of competition.

The rules concern only the commercial activities of the SOEs and only apply to the largest SOEs. Public service obligations are an exception: they are not required to follow commercial considerations.

In case of potential problems, rules on transparency allow both sides to seek further information on particular enterprises and their activities on a case-by-case basis.

16. Intellectual Property

The EU and New Zealand have agreed to comprehensive intellectual property (IP) provisions for the effective protection and enforcement of IP rights that will encourage innovation and creativity for our respective industries to stay competitive. The agreement includes provisions on copyright and related rights, trade marks, industrial designs, geographical indications (GIs), plant varieties and protection of undisclosed information, as well as solid provisions on IP enforcement, including border measures.

On copyright and related rights, New Zealand agreed to increase its standards of protection. This includes extending the rights of performers as regards the communication to the public of sound recordings and extending the term of protection for rights of authors, performers and sound recordings producers by 20 years. New Zealand will implement the term extension within 4 years of entry into force of the Agreement.
New Zealand has also agreed to provide artist’s resale right, within 2 years of entry into force of the Agreement.
The agreement covers the protection of registered designs, with a term of protection of at least 15 years, and of unregistered designs.

On Plant varieties, protection is in line with the 1991 International Convention for the Protection of New Varieties of Plants (UPOV 91).

The comprehensive section on IPR enforcement includes provisions dealing with the availability of provisional and other measures regarding intermediaries whose services are used by a third party to infringe an intellectual property right.

Geographical Indications (GIs)

The Agreement will protect the full list of EU wines and spirits (close to 2000 names) such as Prosecco, Polish Vodka, Rioja, Champagne and Tokaji. In addition, 163 of the most renowned EU food GIs, such as Asiago, Comté or Queso Manchego cheeses, Istarski pršut ham, Lübecker Marzipan, Elia Kalamatas olives will be protected in New Zealand.

The Agreement also foresees the opportunity to add more GIs in the future.

This will make it illegal to sell imitations: the use of a GI term for non-genuine products will be prohibited and expressions such as ‘kind’, ‘type’, ‘style’, ‘imitation’ or the like will not be allowed. The agreement grants protection from misleading use of symbols, flags or images suggesting a "false" geographical origin. For example, no-one will be allowed to call cheese Roquefort unless it is the genuine cheese made in Roquefort, France, under specific production conditions.

17. Trade and Sustainable Development

The agreement includes a dedicated chapter on Trade and Sustainable Development (TSD) that covers labour, women’s empowerment, environmental and climate matters. It protects both parties’ right to regulate and prohibits the parties from weakening or failing to enforce their laws in order to encourage trade or investment. The agreement also offers civil society organisations an active role to monitor the implementation of the agreement.

The Chapter is grounded in the international framework and standards. It requires the respect of the core International Labour Organization (ILO) principles covering subjects such as freedom of association, the right to collective bargaining, the elimination of all forms of forced and compulsory labour, the abolition of child labour and non-discrimination at work. The TSD chapter obliges both parties to the effective implementation of the ILO conventions and the Multilateral Environmental Agreements (MEAs) that each party has ratified.

The agreement commits the EU and New Zealand to effectively implement the Paris Agreement and to work together on climate-related matters, including carbon pricing, or transition to low-carbon economy.

The TSD chapter has a broad range of commitments and cooperation provisions on issues such as decent working conditions, including labour inspection social dialogue, sustainable management of natural resources, forestry, fisheries, aquaculture, ocean governance and the promotion of responsible business conduct. It also promotes cooperation to encourage the shift to a circular and resource-efficient economy and deforestation-free supply chains. It also contains provisions regarding the relevant UN and ILO conventions advancing women’s economic empowerment and gender equality, including promoting cooperation in international fora to advance these objectives.

TSD commitments are legally binding and enforceable through the agreement’s general dispute settlement. Moreover, for the first time in the EU trade agreement, the TSD chapter foresees the possibility of trade sanctions as a matter of last resort, in instances of serious violations of core TSD commitments, namely the ILO fundamental principles and rights at work, and of the Paris Agreement on Climate Change.

Finally, the deal will make trade and investment in low carbon goods, services, and technology easier. This includes zero tariffs on green goods and services, such as renewable energy (including wind turbine towers and solar panel elements), and energy efficient products, from the first day of application of the agreement. These goods contribute to achieving environmental and climate goals by preventing, limiting, minimising or remediating environmental damage to water, air and soil and by contributing to the dissemination of technologies that serve to mitigate climate change. An indicative list of these products will be annexed to the agreement.

18. Māori

The EU and New Zealand also recognise the importance that all New Zealanders, including Māori, can benefit from the trade and investment opportunities that the agreement brings. Therefore, in addition to specific provisions in other chapters that may benefit Māori, the agreement includes a chapter on Māori trade and economic cooperation that aims to contribute to advancing Māori economic aspirations through coordinating cooperation activities, such as facilitating cooperation on trade in Māori products or exchanging information on geographical indications.

19. Transparency

Negotiations between the EU and New Zealand began in 2018, based on a mandate unanimously approved by EU Member States. In full consultation with EU Member States, the Commission has reflected in the final outcome the most recent developments in EU trade policy (in particular the outcome of the TSD Review).
Throughout the negotiations, the Commission has ensured full transparency and has kept both the EU's Member States and the European Parliament informed of each step of the process. Likewise, it has discussed the ongoing negotiations with civil society.
The Commission has published negotiating documents and reports of the negotiating rounds online. Transparency will continue to be the Commission's priority in the process of finalising any technical work on the draft agreement and in preparing the Commission's proposals for Council and Parliament decisions to sign and ratify it.

Involving civil society

The agreement gives civil society a prominent role in its implementation, including on the provisions on trade and sustainable development. The EU and New Zealand will keep non-governmental organisations, business and employers' organisations as well as trade unions active on economic, sustainable development, social, human rights, environmental and other matters informed of how they are implementing the agreement. At both national level and in a Joint Forum set up for the purpose, these civil society groups will be able to voice their views and provide input to discussions on how the trade part of the agreement is being implemented.

20. Good Regulatory Practices and Regulatory Cooperation

The agreement promotes transparency in the regulatory process, ensuring timely information is available with public consultations, impact assessments of proposed regulatory measures and reviews of regulatory measures. Additionally, New Zealand and the EU may cooperate on regulatory activities of mutual interest.

22. Small and Medium-Sized Enterprises

The vast majority of companies in both the EU and New Zealand are small and medium-sized enterprises (SMEs), and the agreement will address their specific needs. It notably requires both parties to provide information on market access on a specific SME website and creates a 'SME Contact Point' on each side to cooperate in identifying ways for these companies to benefit from the opportunities offered by the agreement. 

23. Energy and Raw Materials

The Energy and Raw Materials chapter complements the provisions of other chapters relevant to energy (goods, services and investment, technical barriers to trade, state-owned enterprises, and procurement) by providing significant value in a number of areas.

The first of these is eliminating export restrictions of energy and raw material goods. The chapter prohibits export monopolies for energy or raw materials, as well as unjustified government intervention in the price setting of energy goods and raw materials. The chapter also bans export or dual pricing where export prices would be set above domestic prices, which is one of the most important forms of fossil fuel subsidisation globally.

In addition, it will promote trade and investment in sustainable energy goods such as renewable energy and energy efficient products. This will be done by addressing key technology-specific non-tariff barriers related to non-discriminatory access to and use of the grid overseen by an independent regulatory authority, balancing markets, and by promoting cooperation on common standards for renewable and energy efficiency technologies.

Finally, it will increase transparency and fairness of the licensing authorisation processes for hydrocarbons, electricity and raw materials as a means to improve governance and investment conditions.

24. Dispute Settlement

The agreement puts in place a fair, efficient and effective mechanism to solve disputes that may arise regarding the interpretation and application of its provisions. Among other things it includes independent panellists and due process and transparency involving open hearings, the publication of decisions, and the opportunity for interested parties to submit views in writing.

The mechanism will ensure that the EU and New Zealand fully implement their obligations under the agreement so that businesses, workers and consumers can enjoy its benefits. The agreement will for the first time allow for trade sanctions for core TSD commitments, in conjunction with the cooperation-based approach, which will enable the EU to carry out a more assertive enforcement of its TSD chapters.

25. Next steps

Shortly after the conclusion of the negotiations, the negotiated draft texts will be published. These texts will go through legal revision (‘legal scrubbing’) and be translated to all official EU languages. Following that, the European Commission will submit the agreement for signature and for conclusion to the Council. Once adopted by the Council, the EU and New Zealand sign the agreement. Following the signature, the text is transmitted to the European Parliament for consent. After the consent by the Parliament, and once the Council decides to conclude the agreement and New Zealand also ratified it, the agreement can enter into force.