New Zealand’s trade deal with the UAE could unlock Middle East

Just a year after agreeing to enter initial talks, Wellington and Abu Dhabi have concluded negotiations on a Comprehensive Economic Partnership Agreement (or CEPA for short).

The deal will go down as one of New Zealand’s fastest trade negotiations. It is arguably the biggest breakthrough for New Zealand’s relations with the Middle East since negotiations began in 2006 on a wider free trade agreement (FTA) with the six-country Gulf Cooperation Council (GCC).

The CEPA is not a substitute for the wider deal with the GCC – which in addition to the UAE also includes Bahrain, Kuwait, Oman, Qatar and Saudi Arabia.  But the new bilateral arrangement with the UAE will still be incredibly valuable. After all, the UAE is already New Zealand’s biggest export market in the Middle East, with goods and services worth $NZ1.12 billion sold there in the year to June 2024.

Consumers in the UAE, which has a population of around 10 million, have a particularly strong appetite for New Zealand’s high-quality food products – especially dairy, meat and fruit. The UAE is already New Zealand’s fourth-biggest market for milk powder. The quest for food security is a major theme in all six Gulf countries, driven by climate change, growing populations and recent experiences of supply chain ruptures during the Covid-19 pandemic.

There is a strong geostrategic element to the UAE’s previous choices for CEPA partners. So far, agreements have come into force with Cambodia, Georgia, India, Indonesia, Israel and Türkiye. And earlier this month, it was announced that negotiations had concluded with Australia.

For the UAE, the agreements with both Australia and New Zealand will provide a useful combined gateway as geopolitical competition between the United States and China in the Indo-Pacific continues to build. In the future, we could see more ideas like last year’s tripartite agreement between the UAE, New Zealand and Fiji to jointly implement a renewable energy project on three Fijian islands.

The dual ‘down under’ CEPAs will also complement the two deals with Cambodia and Indonesia – both ASEAN members – that have already entered into force in the wider Asia-Pacific region. And overall, the four agreements also reflect a general Gulf interest in ‘looking East’ in a bid to diversify ties beyond traditional partners in Europe and North America – particularly the United States.

A June 2023 briefing paper prepared by New Zealand’s Ministry of Foreign Affairs and Trade (MFAT) and released under the Official Information Act (OIA) shows that the UAE invited New Zealand to be one of its inaugural CEPA partners as early as November 2021. At the time, Expo 2020 was being held in Dubai with a significant Kiwi contribution. Intriguingly, the paper suggests that New Zealand initially played hard-to-get, offering only ‘holding responses, noting that we remain focused on concluding negotiations with the GCC as a whole’.

New Zealand officials were clearly concerned that negotiating a side deal with the UAE could put a deal with the GCC at risk. By September 2023, Wellington had changed its mind – a view that was probably encouraged by Australia’s own positive experience of CEPA talks with the UAE that began in early 2022.

While the main attraction for Wellington clearly lies in boosting export volumes and reducing non-tariff barriers – and New Zealand’s foreign ministry describes the CEPA as a ‘free trade agreement’ – another key benefit may be investment. New Zealand’s new centre-right government has made no secret of its desire to prioritise new infrastructure investment – particularly in roading – while the UAE is home to three of the world’s biggest sovereign wealth funds: Mubadala, the Emirates Investment Authority (EIA) and the Abu Dhabi Investment Authority (ADIA).

Remarkably, the UAE CEPA negotiations seem to have helped, rather than hindered New Zealand’s relations with the GCC and the other fiercely competitive Gulf states. In August, Qatar’s Prime Minister and foreign minister Sheikh Mohammed bin Abdulrahman Al-Thani travelled to Wellington – a first for a Qatari leader. And earlier this month, Todd McClay, New Zealand’s trade minister, headed to Riyadh on a little-publicised but crucial visit.

McClay’s trip prompted a particularly warm and substantive Arabic-language post on social media by Majid Al-Kassabi, the Saudi commerce minister. Dr. Al-Kassabi reported that the pair had ‘discussed ways to enhance our trade relations, most notably the negotiations for the Free Trade Agreement between the Gulf Cooperation Council countries and New Zealand and to benefit from our experiences in implementing economic reforms to enhance competitiveness and enable ease of doing business’.

For now, however, the spotlight will remain very much on the UAE. And while there is much to be celebrated about the CEPA, there will also be some challenges. The UAE’s Ambassador to New Zealand recently addressed the Foreign Affairs, Defence and Trade select committee at the New Zealand Parliament. While the reception for His Excellency Mr. Rashed Matar Alqemzi was generally very warm and welcoming, the Ambassador was also quizzed by David Parker, the opposition Labour Party’s foreign affairs spokesperson, on claims that the UAE is providing arms to parties involved in Sudan’s civil war.

Abu Dhabi categorically denies the allegations, which have received greater publicity since US rapper Macklemore cancelled a concert in Dubai in August as a protest, including a local report that aired on Television New Zealand (TVNZ). Earlier this month, Anwar Gargash – a high-profile former UAE minister of state for foreign affairs and now a senior diplomatic advisor to the country’s president – posted ‘there is no military solution in Sudan & warring parties must work towards finding a peaceful solution to the conflict through dialogue & diplomacy’. In Wellington, the Ambassador told the committee the UAE followed international law and pointed to Abu Dhabi’s significant humanitarian efforts: ‘if you see what we contributed in Sudan, it will give you the right answer to your questions’.

Meanwhile, on the CEPA itself, there have been strong words of support from trade-focused groups such as Export New Zealand and the New Zealand International Business Forum. But there are also more critical voices, such as the New Zealand Council of Trade Unions, which advised against a CEPA in a lengthy submission due to ‘significant concerns about the UAE’s labour rights and standards’, in relation to the treatment of migrant workers.

These issues are serious, but by no means insurmountable. After all, New Zealand has significant experience in navigating similar matters from its longstanding relationship with China, with which it signed a groundbreaking free trade agreement in 2008. And with neither country being perfect, deeper engagement will provide more opportunities to listen and learn from each other in discussion and dialogue behind closed doors. With UAE minister of state for foreign trade Dr. Thani bin Ahmed Al Zeyoudi in New Zealand this week for the conclusion announcement, it seems a likely bet that the formal signing will come as a part of a reciprocal New Zealand ministerial visit to the UAE.

If so, New Zealand Prime Minister Christopher Luxon could well head to Abu Dhabi himself. It would be the first time since 2015 that a New Zealand Prime Minister has visited the Gulf. In written answers to questions this week, the UAE’s Ambassador in Wellington, His Excellency Mr. Rashed Matar Alqemzi, extended a ‘warm welcome’ to future New Zealand ministerial visitors. The Ambassador also noted that any further ‘potential high-level visits’ by the PM or foreign minister Winston Peters would help to ‘advance shared trade and economic interests…delivering real benefits to both countries’.

If Winston Peters and Christopher Luxon do head to the Middle East, it would also be a ideal opportunity to learn the views of counterparts in the UAE about the ongoing war in Gaza, which is approaching its grim one-year milestone with seemingly only escalation in sight. There is an opportunity for Wellington to work with Abu Dhabi more closely on peacemaking efforts: New Zealand last week again broke with its ‘Five Eyes’ English-speaking partners, supporting a UN General Assembly resolution that called on Israel to end ‘its unlawful presence in the Occupied Palestinian Territory’.

New Zealand’s relations with the UAE are already thriving – but now they are moving to the next level.

It is the beginning of a new chapter.

And it could be the start of something even bigger.

Geoffrey Miller is the Democracy Project’s geopolitical analyst and writes on current New Zealand foreign policy and related geopolitical issues. He has lived in Germany and the Middle East and is a learner of Arabic and Russian. He is currently working on a PhD at the University of Otago on New Zealand’s relations with the Gulf states.

This article is republished under a Creative Commons CC BY-ND 4.0  license. View the original at the Democracy Project here.