European Union External Action

New Zealand and the EU

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

Framework for bilateral relationship

In July 2012, New Zealand and the EU entered negotiations for the first bilateral legally-binding overarching political treaty. This treaty – the Partnership Agreement on Relations and Cooperation (PARC) – governs the overall relationship. The PARC Agreement provides a comprehensive framework for more effective bilateral engagement between the European Union, its Member States and New Zealand. It will strengthen political dialogue and cooperation on economic and trade matters, as well as across a wide range of other areas, from science and innovation, education and culture, to migration, counter terrorism, the fight against organised crime and cybercrime, as well as judicial cooperation. It identifies areas of cooperation and provides a de facto work programme.

Negotiations concluded in July 2014 and the text was initialled in March 2015. It was signed by HR/VP Federica Mogherini and Minister of Foreign Affairs Murray McCully on 5 October 2016, in Brussels.

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 was replaced in 2007 by the Joint Declaration on Relations and Cooperation. The Declaration set out a 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.

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 senior officials' and parliamentary levels.

Most recently, Trade Commissioner Cecilia Malmström visited New Zealand in June 2018. Together with her New Zealand counterpart, David Parker, they opened free trade negotiations (more detail below). Earlier in April 2018, Deputy Prime Minister and Foreign Minister Winston Peter met High Representative and Vice President Federica Mogherini in Brussels. This was the first meeting between the two counterparts. Ahead of it, Mr Peters said, “Our shared values and commitment to the global rules-based system make the EU an important partner for New Zealand in today’s increasingly uncertain world”. HR/VP Mogherini and Foreign Minister Peters updated each other on their bilateral relations and exchanged views on recent developments at the multilateral and regional level.

Additionally, Internal Market, Industry, Entrepreneurship and SMEs Commissioner Elżbieta Bieńkowska visited NZ in March 2018.

The last meeting of EU and New Zealand heads of government or state was in 2017. On 14 November, Prime Minister Jacinda Ardern and the President of the European Council Donald Tusk met in Manila where they discussed the common political and trade agenda.

The European Union and New Zealand are currently negotiating a comprehensive and ambitious Free Trade Agreement. This process was launched in June 2018 by EU Commissioner for Trade Cecilia Malmström and New Zealand Trade and Export Growth Minister David Parker. The first negotiating rounds will take place during 2018. The Free Trade Agreement is an important next step in the bilateral relationship between the EU and New Zealand, and is expected to boost trade in both goods and services.

The EU is New Zealand's third largest trading partner after Australia and China. Within the EU, important bilateral trade partners for New Zealand include the United Kingdom, Germany, The Netherlands, France, and Italy.

Besides the Free Trade Agreement, the EU and New Zealand have already negotiated a number of agreements designed to facilitate access to each other's markets and reduce exporters' costs. These include:

  • The Veterinary Agreement, which 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), which 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.

Negotiations underway for an EU-New Zealand Free Trade Agreement

The EU and New Zealand are currently negotiating a Free Trade Agreement. The EU and New Zealand advocate for strong international rules on trade, and the Free Trade Agreement will establish a set of high quality rules that reflect European and New Zealand priorities and values. Common concerns that will be addressed in the negotiations or in other forums include promoting trade in green goods, making sure trade supports sustainable development and environmental protection, and boosting trade in services.

The European Council (Member States) gave the green light for the negotiations on 22 May 2018 by formally approving the negotiating mandate. Prior to this, the European Commission and New Zealand completed a scoping process, public consultations, and impact assessment for the agreement. This earlier process was launched in October 2015.

EU and New Zealand trade negotiators met for a first time in Brussels from 16 to 20 July 2018. During this first negotiating round, negotiators discussed all proposed agreement chapters except for Trade Remedies and Institutional and Final Provisions. A full summary of the round, including 11 textual proposals put forward by the EU, can be found on the EU website dedicated to negotiation documents.

The second round is planned for the Southern hemisphere spring, and will take place in New Zealand.

More information about the trade negotiation process, including the impact assessment, draft negotiating mandate and factsheets can be found on the European Commission website about the negotiations.

New Zealand is an open economy and depends heavily on international trade. The EU is New Zealand's third-largest trading partner, and the second largest source of FDI in New Zealand.

Recent years have seen major challenges to the rule-based international trade system. The European Union and New Zealand are deeply committed to strong international trade rules. 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 around 54% 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 (2008), the first such agreement China has signed with a developed country. Other 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 ("P4") launched in 2005, with Brunei, Chile and Singapore. This agreement was expanded as the Trans-Pacific Partnership (TPP) by including Australia, Canada, Malaysia, Mexico, Peru, the United States, Vietnam, and Japan. The new TPP agreement was signed in February 2016 in Auckland. Following the withdrawal of the United States from the TPP, the agreement was revised and signed by the remaining 11 signatories in 2017 as the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP). New Zealand is 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. New Zealand is also currently negotiating with members of the Pacific Alliance, which includes Chile, Colombia, Mexico, and Peru.

Trade in goods

In the year ended March 2018, the EU was ranked as New Zealand's third-largest trading partner in goods (after China and Australia), New Zealand being the EU's 50th largest partner. Total trade in goods between the EU and New Zealand amounted to around €9bn (NZ$15.5). 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 to around €6.6 billion (NZ$ 6.7bn) for year ended March 2018.

  • EU commercial services exports to New Zealand: NZ$3.1 billion (year ended March 2018)
  • EU commercial service imports from New Zealand : NZ$3.6 billion ( year ended March 2018)

Foreign Direct Investment

For the year ended December 2017, the EU was the second largest source of FDI in New Zealand after Australia and ahead of the US. FDI from the EU accounted for around 11% of investment into New Zealand. Australia accounted for 52 % of FDI to New Zealand while the US contributed around 8%.

  • EU foreign direct investment stocks in New Zealand: NZ$11.9 billion as at December 2017
  • NZ foreign direct investment stocks in the EU: NZ$3.1 billion as at December 2017

The EU and New Zealand cooperate closely to promote peace, stability and prosperity in the Asia-Pacific region. Both have a particular interest in maintaining strong relationships with the countries of the Pacific. The EU is the largest development donor in the world and is 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 Pacific island countries. The Summit kick-started closer EU-New Zealand work to improve sustainable energy across the region. The two partners formed the EU-New Zealand Pacific Energy Partnership to maximise the number of energy projects implemented in parallel.

In April 2014, the EU Commissioner for International Cooperation and Development Andris Piebalgs and New Zealand Foreign Minister Murray McCully embarked on a Joint Pacific Mission to four Pacific partner countries (Samoa, Tuvalu, Kiribati and Cook Islands). This mission was followed two years later, in June 2016, by another, this time in Vanuatu, Kiribati and Tuvalu. The primary objective of these missions was to launch and take stock of the projects under the Pacific Energy Partnership. Joint trips are rare for the EU, and demonstrate the deepening trust and collaboration between the EU and New Zealand.

This cooperation continued in June 2016 when the EU and New Zealand co-hosted the 2016 Pacific Energy Conference in Auckland. The event 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, Neven Mimica and NZ Foreign Minister Murray McCully signed a Joint Declaration of Cooperation on a Pacific Partnership for Sustainable Development. The Declaration signals EU and New Zealand's commitment to expand the scope of their close cooperation on renewable energy to benefit Tonga, Niue and Northern Pacific countries not previously covered. The declaration also paved the way for the expansion of the partnership to other fields such as climate change and sustainable agriculture, starting with Vanuatu.

New Zealand was discovered and settled by Polynesian explorers around the end of the 13th century, but New Zealand also has strong ties with Europe. European knowledge of New Zealand dates to the Dutch explorer Abel Tasman's brief visit to New Zealand in the mid 1600s, and Captain Cook's circumnavigation and mapping of New Zealand's coastline in the mid 1700s.

European settlement and visits increased from the early 1800s, and New Zealand was brought into the British Empire following the signing of the Treaty of Waitangi in 1840. Throughout this period of European contact, Britain has remained New Zealand's strongest European ally, but there is also a long history of settlement from other European countries. These European ties have been an important part of New Zealand's social and political development.

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 meetings 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. Most 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.

Editorial Sections: