UK trade negotiations: Agreement with New Zealand – Report Summary

Summary

The UK-New Zealand free trade agreement (FTA) was signed on 28 February 2022. It is the second FTA negotiated from scratch since the UK left the EU. On balance, we agree that this Agreement should be ratified. However, we believe that all Members of Parliament should have the opportunity to scrutinise it. We have asked the Government to ensure that a debate take place on a substantive motion so that Members can demonstrate their support and table amendments, allowing the Agreement to be thoroughly considered.

This Agreement includes the first standalone Chapter on Māori trade in an FTA signed by New Zealand, which recognises the historic ties between the UK and Māori peoples. It also includes the first Chapter on consumer protection and animal welfare, and includes specific provisions on issues such as antimicrobial resistance. The Agreement goes further than the UK-Australia Agreement in terms of its environmental provisions, recognising the specific targets from the Paris Agreement and expanding the rights of both Parties to adopt measures to protect the environment.

Throughout our Report, we reiterate our concerns that the Government has not published a trade strategy. Without a clearly defined vision, it is unclear how it, our Committee or stakeholders can assess the Government’s success in terms of negotiating and implementing trade agreements. We also question the extent to which its approach to negotiating and agreeing FTAs is joined up across departments.

The Impact Assessment for this Agreement is very similar to that for the UK-Australia Agreement. We repeat a number of our previous concerns about the modelling behind and the information included in the Impact Assessment for this Agreement. For example, we ask the Government to think again about its use of qualitative information and how it models the impacts across the UK’s economic sectors and each of its nations and regions. We remain concerned that the Government appears to have signed trade agreements without a thorough understanding of how they interact with the Northern Ireland Protocol, although we welcome the previous Secretary of State’s agreement to look at this issue again. We also ask the Government to provide us with a list of all new and amended EU legislation that is within the scope of the Protocol, and an explanation of any effects it will have on the operation of this FTA in relation to imports.

Upon ratification of this Agreement, most of the UK’s tariffs for New Zealand’s goods will be reduced to zero. We question whether the Government has fully weighed the benefits and costs of this approach, particularly in terms of the potential effects on the UK’s agri-food sector. For example, we heard that much of New Zealand’s beef, sheep-meat and dairy is produced more cheaply than in the UK, and at a significantly lower carbon-intensity. On the other hand, we are concerned that the safeguards put in place to protect food producers in the UK might not be sufficient, and that the Agreement offers few alternative opportunities for them. We ask the Government to publish an analysis of the risks to the UK’s food security that this Agreement may pose.

In places, it appears that the Agreement does not sufficiently reflect Government policy elsewhere, or the needs of the UK economy. For example, the agreed reduction in duty on wine imported from New Zealand could be countered by the Government’s proposal to increase domestic duties on higher ABV alcoholic beverages. Rules of origin that have been negotiated appear to benefit the UK car industry, but New Zealand is a very small market for the UK’s car industry. Similarly, we heard that the provisions on temporary mobility of people are too restrictive for small businesses. We ask the Government to explain how it will better listen to stakeholders to ensure that their needs are better reflected in future trade agreements.

We welcome the digital trade provisions enabling paperless trade and interoperability which reduce costs for businesses. We note that, although some of the commitments around data protection are not specific enough, New Zealand and the UK have similarly robust approaches to data protection, so the risks are lower than they might otherwise be. There are also some notable differences between this Agreement and the UK-Australia Agreement—for example, this Agreement does not include specific source code provisions—that could create confusion and uncertainty, and we ask the Government to ensure that it provides clear messaging on what the provisions in each Agreement mean, and how they will affect businesses.

Our Report also looks at the implementation of the Agreement. We ask the Government to explain how it will inform and engage Parliament about future changes to the Agreement and how it will resource the regulatory dialogues it has agreed to. We also ask that any trade strategy produced by the Government should explain how it will better coordinate its activities to ensure that UK exporters are better able to compete in a global market.