World Economy

New Zealand is courting a new trade deal

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New Zealand's Prime Minister is looking to clinch a free trade agreement with the European Union, just weeks after finalizing the massive Trans-Pacific Partnership (TPP) deal.

In a joint statement with European Council and European Commission presidents, Prime Minister John Key outlined plans to increase trade and investment ties between his country and the bloc.

Trade ministers from a dozen Pacific nations in Trans-Pacific Partnership Ministers meeting post in TPP Ministers "Family Photo" in Atlanta, Georgia October 1, 2015. Trade ministers from a dozen Pacific nations meeting in Atlanta extended talks on a sweeping trade deal until Saturday in a bid to get a final agreement on the most ambitious trade pact in a generation.
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"We believe that a FTA (free trade agreement) will support sustainable growth and investment, opening up new trade and business opportunities and generating new employment for our peoples."

"Discussions to define the scope and overall approach to the negotiations should start as soon as possible," the statement, released Thursday read.

New Zealand may be feeling a little sore after signing onto a TPP deal that failed to grant as many concessions to the country's dairy sector as Kiwi negotiators had hoped, following concerns from signatories like Canada which fought to protect its own dairy industry.

Herd of cows in New Zealand, North Island, Auckland.
Scott E Barbour | Getty Images

However, Prime Minister John Key told CNBC that his economy still came out smiling.

"It turned out to be a pretty good deal: 800 million consumers, 40 percent of the global economy and 93 percent tariff reduction for New Zealand."

"We didn't get as much as we wanted for dairy, but we probably didn't have to give away as much on intellectual property. And in the end, they are still the largest beneficiary of tariff reduction."

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It's unclear how much New Zealand's potential trade deal with Europe might boost its dairy exports, which according to the government's statistics agency, currently account for around 26 percent of the country's exports.

But Key said the country had a lot to be proud of, and is successfully diversifying its economy.

"Our financials look great, we got back to surplus. It's one of the very few OECD countries doing that. Our debt is 26 percent of GDP," Key said.

He went on to explain that the country's success story was the result of strong trade with China, a growing tourism industry and an influx of migrants.

New Zealand Prime Minister John Key
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"Tourism is really booming, so we now have 3 million tourists come each year. It took 13 years to go from 2 million to 3 million tourists and I think it will take four years to go from 3 million to 4 million," he said.

The country is also benefiting from those who want to stay for good.

When Key was first campaigning to become Prime Minister in 2008, he was concerned about too many New Zealanders leaving home for Australia. At that time, he explained, about 35,000 had left home for their Antipodean neighbor.

"This year, a total of 200 in total have gone to Australia, and in the last 6 months, more Australians have come to New Zealand than New Zealanders going to Australia.

"That's the first time in a generation."