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Cattle photographed in New Zealand. Agriculture plays an important role in New Zealand’s economy, especially when it comes to exports.
David Clapp | Stone | Getty Images
New Zealand’s prime minister told CNBC that the country should look beyond its own backyard for trade opportunities as the South Pacific island nation signs an economic partnership with the United Arab Emirates (UAE).
The free trade agreement, officially known as the Comprehensive Economic Partnership Agreement (CEPA), is seen by Prime Minister Christopher Luxon as a chance to expand bilateral trade between the countries and makes the UAE one of the island’s biggest markets in the Middle East.
“We have had a long-standing relationship for more than 40 years of diplomatic recognition, and now is a chance for us to deepen and expand our economic relationship,” Luxon told CNBC on Monday.
“That is why the signing of CEPA as well as the bilateral investment agreement is very important because they are actually two small developed economies in the world that actually have a lot in common and in common.
there are a lot of shared values and we want to be able to work together and build that relationship.”
New Zealand’s main exports to the UAE include dairy products, manufactured goods, meat, horticultural products and tourism services, the government said in announcing the deal. The deal, which is expected to come into effect later this year, comes as the government aims to double the value of exports in 10 years. It says CEPA will mean 99% of New Zealand exporters of goods will be able to access the UAE market duty-free.
“This includes all New Zealand dairy products, red meat, horticultural and industrial products immediately after the entry into force of the Agreement,” the statement said.
“One in four of our jobs in New Zealand is largely related to trade,” Luxon, head of the center-right New Zealand National Party, which is in power until the end of 2023, told CNBC’s Dan Murphy on Monday in Abu Dhabi.
“When you see a New Zealand company exporting to the world, they can pay their workers
Wages are 7% higher and often our more productive companies. The message to the people at home is that they understand that we are a trading nation. We’re not going to get rich just selling things to each other in the South Pacific or New Zealand,” he said.
“We really need to send great products and services to the world that are in high demand and make sure we open up new markets like the Middle East to actually get those products. By doing that, we bring more money home, and that’s obviously a way we can afford better public services like health and education,” Luxon added.
New Zealand is in need of economic stimulus after its economy shrank last year and entered recession territory in the third quarter. Economy fell 1% in July-September data published in December showed.
The drop followed a 1.1% decline in the previous quarter. Two consecutive quarters of negative growth is widely considered a technical recession.
WELLINGTON, NEW ZEALAND – NOVEMBER 03: Future Prime Minister and National Party Leader Christopher Luxon speaks during a media address in Parliament on November 3, 2023. in Wellington, New Zealand. Special votes cast overseas and by post were certified on Friday, finalizing the results of New Zealand’s general election. The Labor Party was soundly defeated by the National Party, led by Christopher Luxon, who received the largest number of votes. However, National 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 the past three years had been a “very difficult time” for the country, but said inflation, by 2.2% in Octoberwas under control and interest rates were falling. The country’s central bank has indicated that further softening should take place at the next meeting on February 19.
“We have business confidence at a 10-year high. We have consumer confidence at a three-year high. farmer confidence is the highest since 2017 that’s why we know that we have conditions, that people believe in a better future,” he added.
“Now we have to transform and really deliver growth, and that’s where those stronger international trade links are, and encouraging inward investment into New Zealand as well.”
Asked how he feels about Donald Trump’s return to power in the US and the possibility of tariffs on US exports, as the president-elect has widely signaled (with a possible universal tariff of 10% or 20% on all goods imported into the US ). US), Luxon said it was in a “wait and see” mode.
“We will work well with whatever administration the American people elect, and they have
elected Donald Trump and the Republican administration. And I am quite sure that we will work very constructively with them. We will have to wait and see what the tariff policy is in terms of how it actually plays out, or what is played out,” he said.
