Earlier this year the UK signed a free trade agreement with New Zealand, opening up another fresh opportunity for UK businesses, expected to bring in £1.7bn. With New Zealand on our radar as a hot destination for exporting to, the FTA makes it ever more appealing. This will come into force once both parties have completed domestic procedures and are approved by both parliaments.
So what does the new FTA mean for UK exporters?
An increase in trade
It is anticipated that trade will increase by up to 60% with New Zealand, providing economic benefits to the UK economy and businesses.
Fewer restrictions for SME’s
One of the main advantages of the agreement is that customs will release goods within 48 hours, reducing holding costs and time. Ultimately there will be less friction in the transaction of doing business with minimal red tape and paperwork.
Support will be provided for SME’s in particular, helping them to establish contacts and commercial partners in New Zealand. Currently, 5,900 UK SMEs export to New Zealand and will benefit from this.
The removal of tariffs
The biggest barrier to trade between the UK and New Zealand currently is tariffs, however, the new FTA will remove these for both imports and exports if the origin of the goods is from either the UK or New Zealand.
This can be applied for in advance of shipment, creating a legally binding decision.
Who this FTA will benefit
Anyone who wishes to export to New Zealand or import goods from New Zealand. Anyone who uses raw materials from New Zealand for manufacturing and anyone who wishes to move goods through New Zealand.
What are the contingencies?
The main contingency is the rule of origin. Goods will need to have its origin declared as being from the UK or New Zealand. This is its ‘economic nationality’.
This includes wholly obtained products from the country of origin or goods, products that have been produced with wholly obtained materials and products that are produced in the UK or New Zealand but do include some non-originating raw materials. However, for the latter product specific rules and the regional value content (RVC) needs to be satisfied.
Regional Value Content
This determines how much of your finished product originated from the UK or New Zealand and is calculated in two ways and expressed as a percentage.
40% of the value of the product must have originated from either the UK or New Zealand
1. (value of the good – value of non-originating items)/value of the good x 100
2. Value of originating materials/value of the good x 100
Key goods to benefit from the FTA:
· Leather goods
· Consumer goods
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