Cattle photographed in New Zealand. Agriculture plays a large role in New Zealand's economy, particularly when it comes to exports.
David Clapp | Stone | Getty Images
New Zealand's prime minister told CNBC the country needed to look beyond its own borders for trade opportunities as the South Pacific island nation signed an economic partnership with the United Arab Emirates (UAE).
Prime Minister Christopher Luxon sees the free trade agreement, officially known as the Comprehensive Economic Partnership Agreement (CEPA), as an opportunity to expand bilateral trade between the countries and make the UAE one of the island's largest markets in the Middle East.
“We have had a long-standing diplomatic recognition relationship for 40 years, and now there is a real opportunity for us to deepen and expand economic ties,” Luxon told CNBC on Monday.
“That's why the signing of CEPA and also the bilateral investment agreement is really important because actually they are two small advanced economies in the world that actually have a lot in common and a
We have a lot of shared values and we want to be able to work together and grow that relationship.”
New Zealand's top exports to the UAE include dairy products, industrial products, meat, horticultural products and travel services, the government said when announcing the deal. The agreement, which is expected to come into force later this year, is based on the government's goal of doubling the value of exports in ten years. It says the CEPA will result in 99% of New Zealand goods exporters having duty-free access to the UAE market.
“This includes all New Zealand dairy, red meat, horticultural and industrial products from the entry into force of the agreement,” it said.
“One in four of our jobs in New Zealand are heavily linked to trade,” Luxon, leader of the center-right New Zealand National Party, which has been in power since late 2023, told CNBC's Dan Murphy in Abu Dhabi on Monday.
“When you see a New Zealand company exporting to the world, they are able to pay their workers
7% higher salaries and wages, and they are often our more productive companies. The message to people at home is that they understand that we are a trading nation. “We’re not going to get rich selling each other stuff in the South Pacific or New Zealand,” he said.
“We actually need to send great products and services out into the world that there is a lot of demand for and make sure we enter new markets like the Middle East to actually get those products. By doing this we bring more money back home, and of course that is the way we can afford better public services such as health and education,” Luxon added.
New Zealand needs an economic boost after its economy contracted last year and entered recession in the third quarter. The economy contracted 1% in the July-September quarter, data released in December showed.
The decline followed a 1.1% decline in the previous quarter. Two consecutive quarters of negative growth are generally considered a technical recession.
WELLINGTON, NEW ZEALAND – NOVEMBER 3: New Prime Minister and National Party leader Christopher Luxon speaks during a media appearance in Parliament on November 3, 2023 in Wellington, New Zealand. Special votes cast abroad and by post were confirmed on Friday, finally sealing the result of New Zealand's general election. The Labor Party was clearly defeated by the National Party led by Christopher Luxon and won the most votes. However, Nationally will need the support of both the ACT and NZ First parties to form the next coalition government. (Photo by Hagen Hopkins/Getty Images)
Hagen Hopkins | Getty Images News | Getty Images
Luxon said there was no doubt that the last three years had been “a very challenging period” for the country, but said inflation was under control at 2.2% in October and interest rates were falling. The country's central bank has said there will be further easing at its next meeting on February 19.
“We have business confidence at a 10-year high. We have consumer confidence at a three-year high. “We have farmer confidence at its highest level since 2017, so we know we have the conditions for people to believe there is a better future,” he added.
“Now we need to pivot and really drive growth and that's where those stronger international trade links are, but also encouraging foreign investment into New Zealand.”
When asked how he feels about Donald Trump's return to power in the US and the possibility of tariffs on exports to the US, as the president-elect has widely hinted at (with a potential universal tariff of 10% or 20% on all in the USA imported goods). In the US, Luxon said he was in “wait and see” mode.
“We will work well with the government the Americans elected, and they have.”
elected Donald Trump and the Republican government. And I have full confidence that we will work with them very constructively. “We have to wait and see how the tariff policy is actually implemented or what is implemented,” he said.
Comments are closed.