Delegation of the European Union to Nepal

New Zealand and the EU

12/05/2016 - 15:21
EU relations with Country

Framework for bilateral relationship

Since July 2012, New Zealand and the EU have been in negotiations for a first legally binding overarching political treaty, governing their overall relationship. Negotiations of this treaty - the Partnership Agreement on Relations and Cooperation (PARC) – have been concluded and the text was initialled in March 2015. Formal signing is foreseen in second half of 2016.

The first political statement of cooperation between the EU and New Zealand dates back to 1999, with signing of the Joint Declaration on Relations between the European Union and New Zealand.

This has been replaced in 2007 by the Joint Declaration on Relations and Cooperation, an updated political declaration which governs and directs the activity between the two partners. The Declaration sets out a detailed action programme for the EU and New Zealand in such areas as global and regional security, counter-terrorism and human rights, development and economic cooperation, trade, climate change as well as science and technology.

The EU and New Zealand have also negotiated a number of sectoral agreements designed to facilitate access to each other’s markets and reduce exporters’ costs. Notable examples include agreements on veterinary standards, horizontal air transport services, and on mutual recognition of standards and certification. Senior officials' consultations on trade, agriculture, fisheries and science & technology take place every year alternating between Brussels and Wellington. Consultations and information exchanges also take place in areas such as climate change, development assistance and humanitarian aid.

In October 2015, during Prime Minister John Key's visit to Brussels, European Union Council President Donald Tusk and European Commission President Jean-Claude Juncker announced with Prime Minister Key the launching of a process towards an EU-New Zealand Free Trade Agreement. Work is currently under way to prepare the negotiations.

The EU and New Zealand have a number of common goals and are like-minded partners, with positions aligned on most global issues. Both support democracy, the rule of law and human rights; and are active supporters and players in multilateral organisations such as the United Nations and the World Trade Organisation (WTO). They also have shared interests in tackling key global challenges such as climate change, sustainable development, preserving the environment, and also humanitarian aid and fight against terrorism.

There are a number of other policy areas where the EU and New Zealand work towards joint goals. These include inter alia education, fisheries, transport, sustainable energy, or cultural cooperation.

The EU and New Zealand engage in a regular political dialogue, including frequent consultations at ministerial and senior officials' levels.

Since 1999 the European Union and New Zealand have a bilateral agreement for mutual recognition that aims to facilitate trade in industrial products between the EU and New Zealand by reducing technical barriers, including assessment procedures. It covers medicine products and devices, telecommunication equipment, low voltage equipment, machinery and pressure equipment.

The EU is New Zealand's third largest trading partner, after Australia and China. While the United Kingdom remains New Zealand's first export destination in the EU, other countries, such as Germany and The Netherlands, have become more important.

Most economical transactions take place under the agreements of the Joint Declaration on Relations and Cooperation. The EU and New Zealand have also negotiated a number of agreements designed to facilitate access to each other's markets and reduce exporters' costs. Among the most relevant:

  • The Veterinary Agreement facilitates trade in live animals and animal products while safeguarding public and animal health and meeting consumer expectations in relation to the wholesomeness of food products. The agreement also reduces regulatory duplication. It was provisionally applied since January 1997 and became official on 1 February 2003. New and existing requirements of each party to the agreement are subject to a consultation process. A Joint Management Committee has been established to cover all aspects of the Agreement.
  • The Mutual Recognition Agreement (1999) facilitates trade in industrial products between the EU and New Zealand. It covers exchanges estimated at more than €500 million in sectors such as medical devices, pharmaceutical goods, and telecommunications terminal equipment. A parallel agreement was also signed with Australia. These agreements are the first Mutual Recognition Agreements the EU has ever signed with a third country.

Towards an EU-New Zealand Free Trade Agreement

The EU and New Zealand are like-minded partners who share many common concerns in today's international trade environment, such as initiative to further liberalise trade in green goods, trade in services, and others.

The Leaders of EU and New Zealand, in their meeting on 29 October 2015, announced to start the process for negotiations to a comprehensive free trade agreement. Public consultations from both sides have been concluded. The EU's internal impact assessment is on-going. A dialogue on the content of possible future negotiations is currently underway. 

New Zealand is an open small economy and depends heavily on international trade. The EU is an important trading partner for New Zealand, being the second largest trading partner in goods, and the second largest source of FDI in New Zealand.

The European Union and New Zealand are deeply committed to operating within a rule-based trade system. A rules-based system helps to prevent unwanted and unexpected surprises at the border, such as when goods are denied entry or extra costs applied. It also means the EU and New Zealand will work hard to reconcile any disagreements over trade that may arise. This is particularly beneficial to an exposed export-oriented economy like New Zealand.

Exports of goods and services account for 30% of New Zealand's GDP. Its principal export industries are agriculture, horticulture, fishing, forestry and mining, which make up about half of the country's exports. Its major export partners are Australia, China, and the EU. The service sector is the largest sector in the entire domestic economy, followed by manufacturing and construction, and then farming and raw mineral extraction. Tourism plays a significant role in New Zealand's economy, earning NZ$9.6 billion or 15.4% of New Zealand's foreign exchange earnings, and contributing almost 9% of New Zealand's GDP.

New Zealand has negotiated a number of preferential trade agreements including an FTA with China, the first such agreement China has signed with a developed country. Other similar agreements include Australia (1983), Thailand (2005), Singapore (2001), and Hong Kong (2011). New Zealand was also one of the four founding members of the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP) launched in 2005, with Brunei, Chile and Singapore. Negotiations to expand this under the name of Trans-Pacific Partnership (TPP) to also include Australia, Canada, Malaysia, Mexico, Peru, the United States, Vietnam, and Japan were concluded and TPP was signed in February 2016 in Auckland but has yet to enter into force. New Zealand is also participating in the negotiations for the Regional Comprehensive Economic Partnership (RCEP), a preferential trade agreement that brings together the 10 ASEAN Member States and their FTA partners (Australia, China, India, Japan, the Republic of Korea and New Zealand): a total of 16 partners.

Trade in goods

In 2015, the EU was ranked as New Zealand's second largest trading partner in goods (after Australia), New Zealand being the EU's 50th largest partner. In 2015, total trade in goods between the EU and New Zealand amounted to €8.1bn. New Zealand's exports to the EU are largely dominated by agricultural products, while EU's exports to New Zealand are focused on manufactured goods.

Over the years there have been numerous agreements between the EU and New Zealand designed to improve and ease trade. Agreements may be sector specific (meat) or thematic (mutual recognition).

Trade in services

The total trade in commercial services between the EU and New Zealand amounted €20 billion for year ended March 2016.

  • EU commercial services exports to New Zealand: NZ$3.1 billion (year ended March 2016)
  • EU commercial service imports from New Zealand : NZ$3.4 billion ( year ended March 2016)

Foreign Direct Investment

For the year ended March 2016, the EU is the second largest investor of FDI in New Zealand and represents 9.2% of total FDI, after Australia, US being the third largest. Australia accounted for 52 % of FDI to New Zealand while ASEAN countries contributed only 6%.

  • EU direct investment outflows to New Zealand: NZ$9.0billion for the year ended March 2016
  • EU direct investment inflows from New Zealand: NZ$2.7 billion for the year ended March 2016

The EU and New Zealand have both committed themselves to working closely together with the aim of promoting peace, stability and prosperity in the Asia-Pacific region.

In particular, both have a shared interest in maintaining strong relationships with the countries of the Pacific. The EU is the largest development donor in the world and an active player in the neighbourhood of New Zealand, being the second largest donor in the Pacific region.

In March 2013, EU and New Zealand co-hosted the Pacific Energy Summit in Auckland, where a total of NZ$ 635 million was pledged for energy projects in the Pacific island countries There, they pledged to step up cooperation on sustainable energy, working together via the EU-New Zealand Pacific Energy Partnership, with other regional partners and in line with the United Nations’ Sustainable Energy for All initiative. To this end, the EU and New Zealand signed a joint declaration undertaking to maximise the number of energy projects implemented in parallel.

In April 2014, the then EU Commissioner for International Cooperation and Development, Mr Andris Piebalgs, and New Zealand Foreign Minister, Mr Murray McCully, embarked on a Joint Pacific Mission to four Pacific partner countries (Samoa, Tuvalu, Kiribati and Cook Islands), to launch and take stock of the projects under the Pacific Energy Partnership. Two years later, in June 2016, another Joint Pacific Mission was undertaken, this time in Vanuatu, Kiribati and Tuvalu. The primary objective of the missions was to witness the progress in the implementation of the joint projects.

In June 2016, the EU and New Zealand co-hosted the 2016 Pacific Energy Conference in Auckland, which saw another NZ$ 1 billion pledged for development projects in the Pacific, including contributions from private sector. At the Conference, the EU Commissioner for International Cooperation and Development, Mr Neven Mimica, and NZ Foreign Minister, Hon Murray McCully, signed a Joint Declaration of Cooperation on a Pacific Partnership for Sustainable Development. It signals EU and New Zealand's commitment to expand the scope of their close cooperation on renewable energy to benefit, among others, Tonga, Niue and Northern Pacific, countries not previously covered. Furthermore, the declaration paved the way for the future expansion of the partnership to other fields such as climate change and sustainable agriculture, starting with Vanuatu.

Since the mid-1600s, with the Dutch Abel Tasman expeditions, and the late-1700s when Captain Cook first mapped New Zealand's coast, New Zealand's relationship with Europe has been integral to the country's political and social development. New Zealand's strongest European ally throughout this period of growth was Britain. The relationship remained tight until Britain joined the European Community in 1973, and still today the UK remains New Zealand strongest ally in EU political matters.

Essential lines of official communication were established between New Zealand and the then European Community in 1960 when a New Zealand Ambassador was accredited to Brussels and the European Commission.

The importance of informal and flexible meetings between New Zealand and the European Community soon became evident and since 1975 have been convened regularly. These meetings allow the political leaders to discuss the state of the relationship and share information on international developments of mutual interest in a free and frank manner. New proposals or ideas are often discussed and then, the respective officials given a mandate to examine and report back.

Reinforcing ministerial dialogues are periodic visits to New Zealand by EU Commissioners and visits to Brussels by New Zealand Ministers. In 2011, José Manuel Barroso made the first visit by a President of the European Commission to New Zealand in over 20 years.

In May 1996 the relationship between the EU and New Zealand reached a turning point when New Zealand's Foreign Minister of the time, Don McKinnon, called "for some overarching agreement or arrangement with the EU to tie in our various consultations arrangements". Considerable thought in the ensuing years was given to the nature of such an agreement. Three years later, in 1999, the text of the Joint Declaration on Relations between the European Union and New Zealand was signed in Strasbourg. This concrete sign of the deepening of the relationship paved the way for closer cooperation on a broad range of issues. More notably, it provides a solid basis for enhanced political and security cooperation with regard to the Asia-Pacific region, an area where both the EU and New Zealand have a strong interest to ensure stability and prosperity.

The European Union's Delegation in Canberra was accredited to New Zealand in 1984. Following the New Zealand Government's invitation, the EU opened a Delegation in Wellington in May 2004. The Delegation keeps the European Union institutions abreast of significant happenings in New Zealand and facilitates the operation and development of bilateral cooperation.

Given their shared interests and common approach, the European Union and New Zealand regularly consult and continuously cooperate on matters of joint concern such as climate change, development assistance, trade and investment liberalisation, scientific research and humanitarian aid.

The EU and New Zealand have a strong relationship in research, science and technology guided by the Scientific and Technological Cooperation Agreement, which entered into force in January 2009. A bilateral S&T Partnership is under preparation, to focus on precision agriculture and big data.

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