Britain could seek to strike a deal that would allow UK investors to invest a larger amount in the country without needing to obtain approval from the Overseas Investment Office (OIO).
Experts say the OIO’s “investment screening threshold” could be part of a free trade agreement between Britain and New Zealand, which is expected to be released in principle by the end of this month.
Kiwi exporters and negotiators are hoping for a deal similar to Australia’s, which phase out all tariffs and quotas, including sheep and cattle tariffs over 15 years and dairy products within five years.
But there are concerns that New Zealand regulations or policy, especially on investment, may stand in the way.
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Sir Lockwood Smith, the former High Commissioner to the UK, said he would be surprised if the government could not strike a deal by the end of the month, as much of the preparatory work has been thrown out.
Sir Lockwood, former Minister of Commerce and Speaker of the House, was more recently the only non-British adviser to the United Kingdom’s Interim Committee on Trade and Agriculture.
ROBERT CUISINE / STUFF
British High Commissioner Laura Clarke talks about New Zealand’s trade relations with the UK and how they have changed.
He said of all of Britain’s trading partners, New Zealand was “probably as well positioned as any other” to address its concerns, such as ethical farming practices.
“So I am optimistic that we can reach a similar agreement in principle.
“But obviously the UK has to get something in return. Trade deals are a win-win issue. “
As a small, relatively tariff-free market for British goods, commentators say New Zealand has little to offer Britain except investment concessions, l digital economy and financial and legal services which are all within the scope.
It would also be a victory for New Zealand, Sir Lockwood said. “We need foreign investment, we need more competition around certain services.”
A free trade deal like Australia’s with Britain would be seen as a big win for Kiwi meat and wine exporters.
But Australia’s deal also gives Britain the same less restricted level of investment it offers the United States and the CPTTP, the comprehensive and progressive trans-Pacific trade partnership of 11 countries.
In New Zealand, most foreign entities must seek approval from the Overseas Investment Office if they wish to purchase sensitive land or significant assets worth more than $ 100 million.
But New Zealand is giving more leeway to a number of other countries it has trade deals with, including Australia, China and 12 other countries.
Australia has a special threshold, which currently allows non-government investors to buy up to $ 552 million in assets, and government investors up to $ 166 million, without having to go through the OIO process.
Investors from all other countries – including the CPTPP – can invest $ 200 million before approval is needed.
Sir Lockwood said he was unsure whether the foreign investment rules were part of UK trade negotiations, but said it would be “a tragedy” if blanket regulation stifled a progressive deal.
New Zealand also needed more liquidity for infrastructure. “The UK has been a big investor in New Zealand and it would be crazy if we didn’t see a way to move this forward.
“New Zealanders tend to invest in housing and we tend not to have enough money to invest in infrastructure, so quality foreign investment is valuable to this country.”
Besides investment and agriculture, trade negotiations should focus on mutual recognition of professional qualifications and movement of professionals, such as lawyers or business transfers.
Questions remain as to how this might work alongside current Covid settings and the direction of New Zealand immigration policy.
But some observers believe New Zealand’s biggest bargaining chip is its place in the CPTTP, which Britain has asked to join.
According to the Guardian, membership could lead to a 65% increase in UK exports to CPTPP countries over the next decade, worth £ 37 billion (NZ $ 73 billion).
Significant market access for Australia and New Zealand is seen by some as essential to the UK supply.
“There are a lot of good reasons why Britain should be in the CPTPP and it would definitely be in New Zealand’s best interests, but only if they can… do the decent thing about access. to the New Zealand market ”, Stephen Jacobi, New Zealand International Business Forum of Zealand.
Sir Lockwood didn’t think joining the CPTPP was Britain’s ‘number one pilot’, saying it was just as much Britain’s post-Brexit image. “The UK is looking to develop a new model trade deal.”
If investment rules were liberalized for Britain, Mike Petersen, the government’s former special envoy for agriculture, said he doubted New Zealand had necessarily offered the same deal to other countries.
“If the UK were to join the CPTPP, then they would have to negotiate with each of the 11 members and make sure they have a trade deal with those members… It’s a series of bilateral agreements between the 11 parties.
Trade Minister Damien O’Connor has been contacted for comment.