On October 31, 2024, New Zealand and the Gulf Cooperation Council (GCC) marked a pivotal moment in international trade, finalizing a free trade agreement (FTA) after years of diplomatic engagement. New Zealand’s Trade Minister Todd McClay, alongside Gulf counterparts in Doha, Qatar, announced the historic deal, signaling enhanced economic ties and access to lucrative markets. This FTA, nearly two decades in the making, underscores both sides’ commitment to strengthening trade and fostering economic cooperation in an increasingly interconnected global economy.
The GCC consists of six of the world’s wealthiest nations: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE). For New Zealand, these countries represent not only profitable markets but also a strategic gateway to the broader Middle East. Already New Zealand’s seventh-largest export market, the Gulf region imported goods worth NZ$2.6 billion (USD $1.6 billion) from New Zealand in the year ending June 2024. Key exports, especially dairy and meat products, have benefited from high demand due to the Gulf’s desire for premium foods and efforts to enhance food security within arid environments. In return, New Zealand imports mainly oil-based products from the GCC, resulting in a mutually advantageous trading relationship.
Despite existing low tariffs—most goods incur a 5% tariff when entering the GCC—the FTA brings added value by symbolizing a rare and prestigious trade arrangement. The GCC has only two other FTAs, with Singapore and the European Free Trade Association (EFTA), which includes Iceland, Liechtenstein, Norway, and Switzerland. These agreements, signed over 15 years ago, demonstrate the significance of the new accord with New Zealand.
Negotiations for the FTA date back to 2006, with official talks beginning in 2007. By October 2009, New Zealand and the GCC had reached an agreement at the officials’ level, with expectations for a ministerial signing in 2010. However, a series of events delayed this timeline. A tragic helicopter crash near Wellington on Anzac Day in 2010, resulting in the death of three Royal New Zealand Air Force personnel, led then-Prime Minister John Key to cut short his overseas engagements, delaying the FTA’s progression. While unfortunate, this was not the primary cause of delay. The underlying obstacle was Saudi Arabia’s dissatisfaction with New Zealand’s 2003 moratorium on live sheep exports. Saudi businessman Sheikh Hmood Ali Al Khalaf, who had invested in a New Zealand farm for live exports, faced financial losses as hopes for a resumption of live exports dwindled.
In response, New Zealand’s then-Foreign Minister Murray McCully introduced the Saudi Arabia Food Security Partnership, informally known as the “Saudi sheep deal.” This initiative aimed to mitigate the impact of the live export ban by sending live sheep to Saudi Arabia for a breeding program that also promoted New Zealand’s agricultural practices. Despite the NZ$11.5 million investment, the partnership encountered issues, including high lamb mortality in the desert. Controversy ensued, but an inquiry later cleared McCully and other officials of any misconduct. This effort, however, improved diplomatic relations with Saudi Arabia, paving the way for future trade cooperation. In 2017, Saudi Arabia opened an embassy in Wellington, reciprocating New Zealand’s longstanding diplomatic presence in Riyadh.
However, a rift within the GCC further delayed the FTA. In 2017, Saudi Arabia, Bahrain, and the UAE severed relations with Qatar over long-standing political tensions, halting trade among the member states until 2021. Only with the gradual resolution of this conflict did discussions resume, culminating in the recent deal. The resumption of FTA negotiations in March 2022, though cautious at first, gained momentum when the UAE proposed a Comprehensive Economic Partnership Agreement (CEPA) with New Zealand in late 2021. This bilateral agreement became a driving force for broader GCC interest, especially as other GCC members sought to avoid falling behind in trade partnerships. The UAE finalized the CEPA in September 2024, signaling further dedication to trade with New Zealand and sparking renewed enthusiasm for the GCC-wide agreement.
The successful completion of the FTA marks a new era for New Zealand-GCC relations. The agreement strengthens bilateral ties and reflects the GCC’s readiness to expand its trade network with Western countries, potentially including future agreements with the UK and the European Union. For New Zealand, the FTA offers opportunities to deepen connections beyond Saudi Arabia and the UAE, with Qatar and other GCC members, including Bahrain, Kuwait, and Oman, poised for greater collaboration. In achieving this FTA, New Zealand and the GCC demonstrate that strategic patience and resilience can transform longstanding goals into reality, opening doors for economic growth and mutual benefit in the years ahead.
