, Labour’s Shadow
Secretary of State for International Trade, responding
to the announcement of an agreement in principle of free trade
with New Zealand, said:
“As our economy recovers from the pandemic, we need trade deals
that will boost jobs and growth, open up big new markets for UK
exporters, and support our objectives to buy, make and sell more
in Britain. This trade deal with New Zealand fails on every
count.
“According to the government’s own figures, this deal will cut
employment in our farming communities, produce zero additional
growth, and generate just £112 million in additional exports for
UK firms compared to pre-pandemic levels, less than half the cost
of Boris Johnson’s new yacht.
“It is a deal whose only major winners are the mega-corporations
who run New Zealand’s meat and dairy farms, all at the expense of
British farmers who are already struggling to compete. But for
British jobs, growth and exports, this deal is yet another
massive failure.”
Notes for Editors
- The deal announced appears to be the same as set out in
Scenario 2 of the government’s June 2020 Strategic Approach
document, published in June 2020, including full liberalisation
of remaining tariffs on New Zealand exports to the UK, and of UK
exports to New Zealand, along with substantial reduction of
Non-Tariff Barriers: https://www.gov.uk/government/publications/uk-approach-to-negotiating-a-free-trade-agreement-with-new-zealand
- Under the government’s projections (Table 3, Page 54 of the
Strategic Approach document), Scenario 2 is forecast to produce a
change in UK GDP of -0.01% to 0.00% over 15 years (compared to
0.35% GDP growth for New Zealand), and an increase in UK exports
to New Zealand of 7.3% (compared to 40.3% growth for New Zealand
exports to the UK).
- Based on pre-pandemic figures (for 2019), UK exports under
the government's Scenario 2 assumptions would be projected to
rise by 7.3% (£112m) from £1.547bn to £1.659bn, while New Zealand
imports would rise by 40.3% (£485m) from £1.204bn to £1.689bn,
once again making the UK a net importer from New Zealand (as was
the case up to 2016).
- Under these projections, the UK would remain in fifth place
amongst New Zealand’s biggest individual export markets, although
a large step closer to Japan in fourth. For UK exporters, based
on 2019 data, New Zealand would rise from 52nd place into 51st
among the UK’s biggest export markets, above Cyprus but still
£362mn behind Kazakhstan in 50th place.
- Section 4 of the Strategic Approach document (Page 52)
explains the impact of Scenario 2 on the UK farming
industry: “The agriculture and semi-processed food
sectors are estimated to see a reduction in output GVA and
employment relative to the baseline as UK market access in these
sectors increases”. This was the same projection made for
the recent UK agreement in principle with Australia.
- It is worth noting that all these government projections for
the New Zealand deal make the assumption that there are
currently no effective tariffs in place on their meat
exports to the UK, because they do not currently use their full
tariff-free quotas. If the removal of tariffs had been considered
a factor, the projected increases in New Zealand
exports would have been multiple times higher. See
here: https://questions-statements.parliament.uk/written-questions/detail/2021-08-18/40772
