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NZ To Negotiate FTA With E. European Customs Union

by Mary Swire, Tax-News.com, Hong Kong

17 November 2010


New Zealand’s Prime Minister, John Key has announced that negotiations on a free trade agreement (FTA) between New Zealand and Russia, Belarus and Kazakhstan will start early next year.

Positive indications of interest in an FTA were received from Russia following informal contacts between New Zealand’s Trade Minister, Tim Groser, and Russian officials late last year. Further political-level discussions were then held between Russia and its Customs Union partners Kazakhstan and Belarus on the idea of a trade agreement with New Zealand.

Following these positive discussions, the parties decided to start scoping discussions towards a formal commencement of FTA negotiations. The governments have now approved a joint report on the FTA made by the experts teams of the four countries, and have directed officials to conduct negotiations, starting early next year, and conclude an agreement in accordance with the report by the end of 2011.

In a joint statement it was underlined that, as this is the first time the Customs Union member countries Russia, Belarus and Kazakhstan have entered full FTA negotiations, it represents an important step in the development of the Customs Union and its integration into international trade and economic system.

It was added that the proposed FTA will be of particular significance, “since it will add a new and important element into the dynamic and rapidly evolving Asia Pacific economic architecture, further linking the four countries into this economic integration process.”

"Free trade deals offer real benefits for jobs and economic growth in New Zealand and I am very pleased to be able to announce the start of negotiations on this FTA," Key said. "Russia is one of the world's emerging powerhouses. It is the 12th largest economy in the world and the world's fifth-largest food importer, with food imports reaching USD30bn in 2008.”

"An FTA with Russia would give us an improved position in that market. New Zealand's exports to Russia grew 267% from NZD51m (USD40m) to NZD187m between 2000 and 2009. There is further strong growth potential, not only in food and beverage exports but also in agritech, specialized manufacturing and clothing."

It was added that New Zealand's exports to Russia, while increasing over the last decade, have not kept pace with the rapid increase in overall Russian imports, particularly of agricultural products (up around 500% since 2000). With a huge population and a growing sector of wealthy consumers, there is high demand for luxury goods, in particular for high-quality food and beverage products. This, it was underlined, presents an excellent opportunity for New Zealand firms.

Russia was said to be looking to further develop its own agricultural sector, and there would be opportunities for New Zealand through exports of agriculture systems, and of agricultural, forestry and construction equipment. In addition, other opportunities would arise in clothing and specialized manufacturing. A number of services areas, including ICT, education and tourism, would also offer potential for New Zealand’s service sector.

TAGS: Russia | tax | free trade agreement (FTA) | law | agreements | Belarus | Kazakhstan | New Zealand | trade

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