2. EU approves launch of NZ trade talks

A free trade deal with the EU could deliver a billion-dollar boost to New Zealand's economy. Photo: Lynn Grieveson.

New Zealand’s long pursuit of a free trade deal with the European Union has moved closer to reality, with the EU’s Foreign Affairs Council approving the launch of negotiations.

The negotiating mandate is a major step forward after the EU and New Zealand first announced their intention to negotiate an FTA in late 2015.

European Commission president Jean-Claude Juncker said the talks with New Zealand and Australia would follow successful agreements with Canada, Japan, and other countries “committed to open and rules-based global trade”.

Juncker said the negotiations would take place “in the greatest transparency”, saying open trade had to go hand in hand with open and inclusive policy making.

EU Trade Commissioner Cecilia Malmström said the EU was already close with Australia and New Zealand in terms of shared values and an open outlook.

“Together, we will now negotiate win-win trade deals that create new opportunities for our businesses, as well as safeguard high standards in key areas such as sustainable development…

“Starting these talks between like-minded partners sends a strong signal at a time where many are taking the easy road of protectionism.”

The EU is currently New Zealand’s third-largest trading partner, with two-way trade excluding the UK (which will soon leave the union) worth about $16 billion a year.

Trade and Export Growth Minister David Parker said the EU’s decision was an endorsement of the Government’s decision to prioritise the FTA, suggesting Prime Minister Jacinda Ardern’s advocacy for a deal during her recent Europe trip had “helped tip the balance”.

“These negotiations offer significant economic gains for New Zealand and the EU. They are an example of like-minded countries working together at a time when the world faces a rising tide of protectionism.”

Parker said the Government would release more information at the start of negotiations, outlining its priorities for the agreement and its plans to consult with New Zealanders on the talks.

Malmström will visit New Zealand next month to formally launch negotiations, with the first rounds of talks set down for July in Brussels.

The EU’s impact assessment for a deal with New Zealand estimates an FTA would increase New Zealand’s GDP by 0.5 percent or $2.2b.

In a sign of potential pitfalls to be addressed during negotiations, the document also cites as a cost the impact of trade liberalisation on small farmers in Europe.

Untangling the impact of Brexit on New Zealand-EU trade may also be a topic of discussion, with a spat over market access last year providing a taste of the difficulties ahead.

New Zealand First’s coalition agreement to move ahead with a Russia FTA appeared to raise concern on the European side, with EU Ambassador to New Zealand Bernard Savage reportedly saying any warming of relations would be viewed in a “very negative” light.

The Government eventually put Russia trade talks back on ice, following international outrage over the Skripal poisoning incident in the UK.