New Zealand Prime Minister John Key has announced that the European Union has agreed to consider a free trade deal with New Zealand. Mr Key said that if the deal will push through, it would be a breakthrough for the country.
Mr Key has discussed plans with the presidents of the European Council and the European Commission at the Nuclear Security Summit at Netherlands' The Hague. While attending the summit, Mr Key has been working to secure a free trade deal with EU countries since New Zealand doesn't want to rely too much on exports to China.
The prime minister said New Zealand is exposed to "concentration risk" since most of its products for exports go to China. While China's demand for New Zealand products remain strong, there may come a time that the world's second largest economy may experience a slowdown or consumer preferences may change. Mr Key said New Zealand cannot be completely dependent on one country alone.
The European Union is the third biggest trading partner of New Zealand with $16 billion in annual trade. Mr Key is hoping that the free trade deal will increase the figure to $20 billion in the next five years. He said the EU is New Zealand's "long standing close friend and partner" with a shared history and common values. Over the next 12 months, New Zealand and the EU have agreed to consider a free trade deal.
New Zealand's economy had grown 0.9 per cent in the fourth quarter of 2013 which indicates the programs of the government are working, according to Finance Minister Bill English. According to Mr English, consumer and business confidence remained high as the manufacturing sector continues to grow for nearly one year and a half. The finance minister said New Zealand's current account deficit is less than half of what it was in 2009.
The EU free trade deal will be another economic breakthrough for the island nation. New Zealand is currently paying export taxes to EU member countries. Chile, which has a free trade deal with the EU, does not pay tariffs for its exports. The success of the EU free trade deal will remove the costs New Zealand businesses have to pay to sell their products in Europe.