Brexit impact on New Zealand

While the United Kingdom exit from the European Union poses major challenges for the UK and for the rest of Europe, it should mainly offer opportunities for New Zealand.

We are trying to do a trade deal with the UK as soon as that is possible (they will be a tad busy at the moment), and also want to make progress on a trade deal with the EU.

Serena Kelly at Stuff looks at Brexit: the past, present and future impact on New Zealand

The past is of interest but it doesn’t matter much now. What we can do now and our future prospects are more important.

So what does Brexit mean for New Zealand and how has New Zealand reacted to developments?

Trade

Trade is the most vital interest for New Zealand’s foreign policy. Official statistics show that for the year ending June 2016, the EU was New Zealand’s third largest trading partner (and rising), and the UK our fifth largest export market. Out of our total trade with the EU, UK trade makes up 20 per cent.

The EU’s importance to New Zealand was showcased a few weeks ago when Prime Minister Bill English made his first official trip to Europe. In what was possibly a first for his National party, English visited Brussels before the UK.

During his Brussels visit, the possibility of fast-tracking the EU-NZ FTA was promoted on both sides – in order to signal to the world the importance of trade liberalisation in the face of a global trend towards so-called populism.

Indeed, Trade Minister Todd McLay has indicated that the EU-NZ FTA is likely to be finalised before an UK-NZ FTA. This is understandable – Britain still has at least two years to negotiate its exit from the EU and has yet to be accepted as a member in the World Trade Organisation.

No improved immigration access

Immediately after the referendum, there was hope that New Zealanders would benefit from relaxed immigration laws directed at New Zealanders. Unsurprisingly – given the consensus that Brexit was a vote against unfettered immigration – Prime Minister May recently told Prime Minister English that there would be no change.

Patience may be required.

Theresa May’s letter last month means there is suddenly a probable timetable for Brexit– around 18 months. May’s letter only hints at the phenomenal amount of time and manpower required to extract the United Kingdom from the European Union and to come to an agreement about the future relationship between the EU and UK. This means very limited resources for relationships with third countries such as New Zealand.

New Zealand may be a minor player and a low priority – but the UK could benefit from our extensive experience with doing trade negotiations, compared to their almost complete lack since they have been in the EU.

Getting in early would be a big deal for New Zealand. As far as size of trade goes it would be a small deal for the UK, but they could gain a lot more in other trade if they manage to do something quickly with us.

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1 Comment

  1. Missy

     /  April 18, 2017

    A couple of points on this article:

    1. Immigration. At present until the UK have an agreement with the EU on reciprocal rights, and have worked out how the EU citizens will be treated in the future, looking at any immigration advantages from Brexit is premature. However, in saying that, there is support from some of the public, and some MPs for a CANZUK (Canada, Australia, NZ, UK) free movement of labour – along the lines of the Aus / NZ free movement – whereby workers can move freely between the countries, but not be able to receive any form of welfare payments, or Government help. This is different to the Freedom of Movement with the EU on a number of counts, the first being that the countries are all similarly developed, with similar Cost of Living, wages, etc, and there is no economic disparity (unofficial polls also suggest Canada is the most popular of these countries for people to go to), also unlike currently with the EU FoM citizens would not have an automatic right to come in regardless (i.e.: criminal convictions can keep them out, and deportation is still an option if they do not get a job or commit a crime – even a petty theft), the final point on this is that there would be no state help for those travelling to the other countries, at the moment EU citizens are eligible for unemployment benefit, child tax credits etc. Another point to note on this, less than 1 million UK citizens live in 27 countries of the EU, over 2 million UK citizens live in Canada, Australia, and NZ – we are far more popular than the EU for UK ex pats. 🙂

    Loosening of immigration rules won’t be immediate, but I think there is an appetite for it.

    2. NZ-EU FTA. I remain sceptical on this happening quickly for a number of reasons, but mostly due to the fact that the FTA can be vetoed by any nation, (and in the case of Belgium – region) in the EU. The Canada-EU FTA took over 7 years to agree to, and was almost scuppered completely by a small Belgian region – Walloon (population 352,000). The EU work in their own interests, and what it will come down to is how threatened France, Netherlands, Ireland, Italy etc feel about NZ imports coming in without tariffs – especially if it means they may have to look at increasing subsidies to compete with (in some cases) a superior quality product in terms of Wine, Dairy, and Meat. quite a bit cheaper in the EU – I can’t see France, Spain, or Italy being happy about that. My personal view is that there will be an attempted veto on a NZ-EU FTA by one of the countries that rely on agriculture, horticulture, or wine, in an attempt to stop NZ products becoming cheaper.

    3. I agree that there will be limited resources from the UK to devote to any FTA negotiations with countries such as NZ, Australia, or the US during the Brexit negotiations, but once Brexit is done I think we will be able to achieve a quick agreement with the UK, so I would expect a deal within 12-18 months after Brexit.

    Reply

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