EU-Australia-New Zealand trade deals have promise

Outlook

On May 22, EU states agreed to begin free trade agreement (FTA) talks with Canberra and with Wellington. Both FTAs are likely to be agreed in coming years. Yet talks could be slowed by their technical complexity; by EU internal debates on the bloc’s future direction and reform; and by EU, Australian and New Zealand business lobbies that will be keen to protect their trade advantages, giving up as little as possible.

In the meantime, Canberra and Wellington’s foreign trade priorities are likely to hew increasingly towards the new eleven-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), arrangements for which are more advanced -- Australian and New Zealand firms will likely look to increase their trade with CPTPP countries first.

Impacts

• Unless it stays in an EU-UK customs union post-Brexit, London will seek FTAs with Canberra and Wellington; prospects are strong.
• Businesses from the EU-28 states are likely to set up in CPTPP countries, eyeing opportunities inside the trade area.
• The tech sector will offer new EU-UK-Australia-New Zealand trade opportunities, irrespective of geographical distances.
• The United Kingdom may decide post-Brexit to join the CPTPP.