Gulf agrees to sign free trade agreement with New Zealand

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JEDDAH - The Gulf Cooperation Council (GCC)Gulf Cooperation Council (GCC) has agreed to sign a free trade agreement early next year with New Zealand, Radio New Zealand reported on Tuesday.

Gulf Cooperation Council is comprised of Bahrain, Oman, Kuwait, Saudi Arabia, the United Arab Emirates and Qatar.

The agreement with the GCCGCC will build on the $1.3 billion of annual New Zealand exports to the region.

The Gulf states make up New Zealand's third most valuable sheep meat market after the European Union and the United States.

The free trade agreement has to be ratified by the six member states before it takes effect.

The agreement followed six rounds of negotiations which have been running since 2007.

Saudi Arabia alone is New Zealand's 15th-largest export market, taking $550 million of product in the 2 months through September, down 25 percent from a year earlier, according to government figures.

New Zealand's major exports to the region are dominated by primary sector products such as dairy, sheep meat, and wood, but there is strong interest in critical services areas such as ICT, education, environmental and professional services.

New Zealand exported about $750 million worth of dairy products to the Gulf region in the past year, most of that from Fonterra.

Fonterra is a leading multinational dairy company, owned by 13,000 New Zealand dairy farmers and is the world's largest exporter of dairy products.

Fonterra chairman Sir Henry van der Heyden said dairy exports to the Gulf states at present incur 5 percent tariffs and the trade agreement should allow New Zealand to become more competitive and continue increasing sales.

The meat industry is also looking forward to the elimination of tariffs, which cost exporters more than $7 million on sheep meat and beef shipped to the Gulf last year.

BusinessWire reported on Tuesday that total bilateral trade is valued at $3.85 billion.

"The agreement with the GCCGCC offers valuable commercial advantages to New Zealand businesses leading to stronger and more diversified presence in both the GCCGCC states and the wider Middle East," said Trade Minister Tim Groser. "While there has been a real focus on the Asia-Pacific region of late, this FTA will provide a strong platform for export growth into a region that is likely to emerge strongly from the global recession," he said

Exact details have not yet been confirmed, as officials still need to complete the verification process before they are made public.

Business NZ spokesman Bruce Goldsworthy said the deal comes at an opportune time for New Zealand's economic growth.

"Diversity is of great importance in aiding our emergence as a strong, export-led, free trading economy," Goldsworthy said.

Fonterra said with dairy exports of $686 million to the region in the May year, up from $498 million in 2006/07, the region's large population of young people represents an "exciting opportunity."

© The Saudi Gazette 2009