New Zealand and the UK have agreed in principle the details of a historic Free Trade Agreement (FTA), which will see a boost of almost NZ$1 billion ($720 million) to Wellington's GDP and unprecedented access for Kiwi exporters to the British market, Prime Minister Jacinda Ardern said on Thursday.

New Zealand Prime Minister Jacinda Ardern. File photo

Christchurch:

The FTA will also see an elimination of all tariffs by the UK on New Zealand exports, with over 97 per cent being removed the day the deal comes into force, Xinhua news agency quoted the Prime Minister as saying. 

As a result, New Zealand exporters will save approximately NZ$37.8 million per year on tariff elimination alone, statistics show. Elimination of tariffs covers all honey, wine, kiwifruit, onions, a range of dairy and meat products, and most industrial products. 

The deal will also see significant increases for beef and sheep meat market access, Ardern said, adding Working Holiday arrangements for young people from both countries are to be improved and extended. 

New Zealand is the second country to secure a new FTA with the UK after Brexit, Ardern said, adding the FTA will further accelerate New Zealand's Covid-19 economic recovery and substantially cuts costs for exporters and businesses immediately. 

She said New Zealand's export beef volumes will increase from 12,000 tonnes to 60,000 tonnes, and those of sheep meat will rise from 149,205 tonnes to over 164,000 tonnes, with free market access after 15 years - putting more money back into the pockets of Kiwi farmers while presenting them the opportunity for further growth. 

The UK was New Zealand's seventh largest trading partner pre-Covid, with two-way trade worth nearly NZ$6 billion to March 2020, statistics show. 

Trade Minister Damien O'Connor said pre-Covid estimates also projected that New Zealand goods to Britain will increase up to 40 per cent and that New Zealand GDP will benefit up to NZ$970 million due to the FTA. 

More than 260 environmentally beneficial products have been prioritised for tariff elimination - the largest environment goods list ever agreed, O'Connor said. 

The agreement in principle sets out the key elements of the FTA, with the text to be finalised over the coming months, he said.