Formal negotiations have been announced to create a Free Trade Agreement between New Zealand and the United Arab Emirates.
The pledge to talk was announced on Monday night by the visiting New Zealand Trade Minister Todd McClay and his UAE counterpart, Dr Thani bin Ahmed Al Zeyoudi.
The agreement will be officially named the Comprehensive Economic Partnership Agreement (CEPA). The details of deal are still to be worked out in negotiations, but are aimed to give New Zealand better access to almost 10 million people in one of the richest countries in the world, made up of seven emirates dominated by Dubai and Abu Dhabi.
Trade is already extensive, and works in NZ’s favour. It is a top 20 export destination – in the year to last September, goods and services exports to the UAE increased 17%, to $1.02 billion. Two-way trade was $1.17bn, and McClay hopes for more.
“We would hope to see tariffs reduced in most of the areas that we are in the export business, which is predominantly around food,” McClay said.
“So, in this market, companies like Fonterra do quite a bit already. We’d like to see significant reductions on the products they put in there, which will make New Zealand food exports more competitive in these markets.
“It will also set out a clear a clear framework of rules that some exporters can rely on.”
McClay could not say how big New Zealand trade to the UAE could grow to, but pointed out that the potential for expanded trade from an FTA is demonstrated by the FTA with China, which experienced two-way trade growth from a few hundred million to $38bn.
McClay said there is no official time frame for the talks, but both sides “want it done quickly”.
The CEPA is for now a sort of consolation prize for the stalled FTA with the Gulf Co-operation Council (GCC). An agreement with this group, which includes the UAE as well as rich nations like Saudi Arabia and Kuwait, has languished for a decade and a half, despite almost crossing the finishing line in 2009.
The agreement faltered back then due to political difficulties and a fear that mass imports from NZ might disincentivise efforts to somehow get the desert to bloom with irrigated farms and make those Middle East nations less dependent on food imports.
But this policy has eased more recently, since NZ exports have poured in anyway, reaching $1.9bn in the most recent figures. At the same time, GCC countries sold NZ $2.9bn worth of goods, mainly petroleum products.
At this stage, the two sides have agreed to get together and “kick the tyres”, to quote McClay.
“And so, officials will get together in the coming month or so and have a close-up look at the agreement and then report to their ministers.”
