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