NZ reaches trade deal with Gulf states

Trade Minister Todd McClay completed the deal after eight months of meetings and negotiations Photo: RNZ

In a major breakthrough, New Zealand has finally struck a trade deal with the six Gulf nations, ending an almost two decade-long effort by multiple governments.

The deal, concluded in Doha overnight, will deliver duty free access for 99% of New Zealand's exports over 10 years.

It comes after New Zealand in September this year concluded a free-trade agreement with the United Arab Emirates - the fastest the country has ever struck, taking just four months.

Together with the Gulf Cooperation Council (GCC) deal, 51% of New Zealand's exports to the Middle East region will now be immediately tariff free on signing.

From 2007 to 2009, New Zealand and the Gulf Cooperation Council negotiated and substantially concluded an FTA, but it was never finalised or signed due to a moratorium on FTAs enforced at the time by the GCC.

It was March 2022 when the GCC agreed to finally re-engage with New Zealand following a visit by then-Trade Minister Damien O'Connor.

Five rounds of meetings, mostly via video conference due to Covid-19, were done between negotiators throughout that year and into last year, up until the election was held and there was a change of government and minister.

By the time Todd McClay took over, the first round of in-person negotiations had already taken place, and technical working groups had been held on both market access and labour/environment issues.

McClay completed the deal after eight months of meetings and negotiations under his watch, beginning with World Trade Organisation (WTO) ministerial meetings in Abu Dhabi in February. During that time, he travelled to the region seven times.

One of the ongoing public concerns for any deal with the GCC has been whether live sheep exports would be demanded, and potentially granted, as part of negotiations.

Under Sir John Key's government, then-foreign minister Murray McCully gave more than $11 million in cash, livestock and agricultural equipment to a Saudi livestock importer to try appease the businessman, who was believed to be blocking any FTA with the Gulf States.

By then New Zealand had banned live sheep exports due to animal welfare concerns but to try end the grudge the government flew 900 pregnant sheep to the Saudi desert, where many of their lambs immediately died.

An Auditor-General report later found no evidence corruption had taken place but heavily criticised the government's processes and handling of it at the time.

RNZ understands live sheep exports were never raised with New Zealand negotiators this year, and at no point made it to the table for discussion.

Speaking to RNZ from Doha, McClay described the agreement as the "highest quality deal the GCC has done to date and its first with a major agricultural exporter".

"Successfully concluding a trade agreement with the GCC has been a long-standing ambition for successive governments for almost two decades," he said.

New Zealand and GCC trade is worth over $3 billion annually, with New Zealand exporting $2.6 billion in the year to June 2024. That includes $1.8 billion of dairy, $260 million of red meat, $72 million of horticulture and $70 million of travel and tourism services.

The GCC is made-up of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.

As part of the FTA, Kiwi businesses will have guaranteed access to central government contracting opportunities. It will be reciprocal for all GCC member countries except Saudi Arabia, which is not part of the Government procurement chapter.

The agreement also:

• Affirms human capital and labour standards through commitments to the International Labour Organisation (ILO) Declaration on Social Justice for a Fair Globalisation.

• Confirms and honours women's economic empowerment through commitments to the Convention on the Elimination of All forms of Discrimination Against Women (CEDAW).

• Secures climate objectives in line with New Zealand's international obligations through the General Collaboration on Sustainable Development Chapter, where both NZ and the GCC recognise the importance of addressing climate change, and the principles of the UNFCCC and the Paris Agreement.

• Retains New Zealand's right to regulate, including through the Treaty of Waitangi Exception.

This is the first trade agreement the GCC has done with a Western country that includes commitments to adhere to the CEDAW.

Women's rights in Saudi Arabia have attracted a lot of international attention and concern, often being put up as reasons not to engage with the country on trade matters.

Organisations including the United Nations and the World Bank have noted significant improvements in recent years.

The anti male-guardianship campaign led to significant advances in 2019 when a royal decree allowed for the first time Saudi women over 21 to register for divorce and marriage, apply for passports and other official documents, and travel abroad without their guardian's permission.

Trade facts and figures, provided by the Ministry of Foreign Affairs and Trade.

GCC overall

Two-way trade value of $3.06 billion

Exported $2.61 billion

Imported $448.11 million

If treated as a single country, for trade in total goods and services this country grouping would rank 7 for highest export value, 28 for highest import value, and 11 for highest total trade value.