Trade Agreement with New Zealand

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What You Need to Know about the Trade Agreement with New Zealand

Trade between the United States and New Zealand is set to become more open and predictable, thanks to a new free trade agreement (FTA) signed by the two countries on May 17, 2021. The FTA, officially called the United States–New Zealand Trade Partnership Agreement, or TPP-11, updates and expands the existing Trans-Pacific Partnership (TPP) that was negotiated by 12 Pacific Rim countries in 2016 but was later abandoned by the U.S. under the Trump administration. Here are some key highlights of the FTA and what they mean for different stakeholders.

Benefits for U.S. exporters

The FTA eliminates tariffs on 98% of U.S. goods exports to New Zealand immediately, including beef, dairy, wine, and seafood, and provides new market access for some products, such as peanuts and cherries. According to the Office of the U.S. Trade Representative, the FTA will increase U.S. merchandise exports to New Zealand by nearly $400 million and supports American jobs in various sectors. Moreover, the FTA includes provisions that promote digital trade, protect intellectual property, and ensure fair competition, which can help U.S. businesses expand their presence in the fast-growing Asia-Pacific region.

Benefits for New Zealand exporters

The FTA offers similar benefits to New Zealand exporters, who will enjoy duty-free access to the U.S. market for 99% of their goods exports, including kiwifruit, wine, and manufactured products. The FTA also eliminates certain non-tariff barriers and enhances regulatory coherence and cooperation between the two countries, which can reduce compliance costs and enhance competitiveness for New Zealand firms. According to the New Zealand government, the FTA is estimated to boost the country`s GDP by about $2 billion over the next 15 years and create new opportunities for its farmers, manufacturers, and service providers.

Challenges for U.S. workers and farmers

While the FTA is expected to generate overall economic gains for both countries, some U.S. labor unions and farm groups have raised concerns about the potential negative impacts on certain sectors. For example, the United Food and Commercial Workers International Union (UFCW) argues that the FTA could lead to lower wages and working conditions for U.S. meatpacking and food processing workers, as New Zealand beef and lamb imports could flood the market and drive down domestic prices. The National Farmers Union (NFU) also worries that the FTA fails to address New Zealand`s use of subsidized dairy exports, which could harm U.S. dairy farmers who are already struggling with low prices and oversupply.

Wider geopolitical implications

Beyond the economic benefits and challenges, the FTA also has wider geopolitical implications for the U.S. and New Zealand, as well as for the Asia-Pacific region and the global trade system. The FTA reaffirms the strategic partnership between the two countries and their shared commitment to rules-based trade and security, which can strengthen their influence in the region and counter the rising influence of China. The FTA also sends a signal to other countries that are seeking to advance trade liberalization and regional integration in the absence of U.S. leadership, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which includes Japan, Canada, and eight other countries.


The trade agreement with New Zealand is a significant development in U.S. trade policy and global economic diplomacy. It reflects the Biden administration`s efforts to reengage with allies and partners in the Asia-Pacific region and to promote inclusive and sustainable trade that benefits workers, farmers, and businesses. However, the FTA also poses some challenges and risks that need to be addressed through effective enforcement, consultation, and adjustment mechanisms. As such, the FTA should be seen as a step towards a more comprehensive and strategic approach to trade that balances economic interests, social concerns, and geopolitical goals.