The EU’s Free Trade Agreement with Australia and New Zealand: What it Means for Businesses
In June 2018, the European Union and Australia and New Zealand began negotiating a free trade agreement (FTA) that would eliminate tariffs and barriers to trade. Negotiations have not yet been finalized, but the proposed agreement would provide significant benefits for businesses in all three regions, including increased access to new markets and reduced costs.
One of the main goals of the FTA is to increase trade and investment between the EU and Australia and New Zealand. The agreement would create a level playing field for businesses in all three regions, by removing tariffs on goods and services and reducing non-tariff barriers, such as regulatory differences and customs procedures. This would make it easier for businesses to export their products and services to new markets, and for consumers to enjoy a wider variety of goods at lower prices.
The FTA would also provide a boost to the economies of all three regions. According to the European Commission, the agreement could increase the EU’s GDP by €4 billion ($4.7 billion) and create up to 10,000 new jobs. Australia and New Zealand would also benefit, with the FTA expected to generate up to A$4 billion ($2.8 billion) in additional exports to the EU by 2035.
In addition to economic benefits, the FTA would also improve regulatory cooperation between the EU and Australia and New Zealand. This would create more predictable and transparent rules for businesses, reducing the risk of trade disputes and improving the overall business environment. The FTA would also provide a framework for future collaboration on issues such as climate change, digital trade, and intellectual property.
For businesses in the EU, the FTA would provide greater access to the Australian and New Zealand markets, which are relatively open and diverse. This would create new opportunities for companies of all sizes, particularly in sectors such as agriculture, food and beverages, and renewable energy. The FTA would also provide a mechanism for resolving trade disputes, ensuring that businesses can operate with confidence and certainty.
However, there are also some potential challenges associated with the FTA. One of the main concerns is the impact on local industries in both Australia and New Zealand, particularly in the agriculture sector. The FTA would remove tariffs on agricultural products, making it easier for EU farmers to export their products to Australia and New Zealand. This could potentially lead to increased competition for local farmers, who may struggle to compete with cheaper EU imports. Similarly, some EU industries may find it difficult to compete with Australian and New Zealand businesses in certain sectors.
Overall, the proposed FTA between the EU, Australia, and New Zealand has the potential to be a game-changer for businesses in all three regions. By removing trade barriers and providing a framework for future cooperation, the FTA would create new opportunities for businesses to expand their operations and increase their exports. However, businesses should also be aware of the potential challenges and risks associated with the FTA, and take steps to prepare for possible changes in their markets.