A decade of the NZ–Korea FTA: a platform for cooperation in challenging times

Philip Turner: "New Zealand’s exports have certainly grown – by 40 percent since 2015 – but have been dwarfed by Korean export growth"

This year the Korea-New Zealand Free Trade Agreement marks its 10-year anniversary.  It is a good moment to reflect on what has changed in that time – the good and the less so – and what might lie ahead.  

First the good news: the FTA did what it set out to do in providing a massive boost to trade.  Two-way goods and services trade has doubled – from $4.36 billion in the June 2015 year to $9.02 billion in the year to June 2025.   

The less good news is that the lion’s share of the growth has gone to the Korean side. In 2015 our bilateral trade was equally balanced; now Korea enjoys a substantial trade surplus. 

New Zealand’s exports have certainly grown – by 40 percent since 2015 – but have been dwarfed by Korean export growth, particularly since Covid-19, as shown in the graph below. 

Much of Korea’s growth has been in oil and petroleum products. In the June 2025 year Korea exported $6 billion to New Zealand while we sent only half of that the other way.

Further cause for concern is New Zealand’s continuing failure to diversify our exports. Contrary to the Government’s hopes, nearly all the growth in our exports to Korea has come from the food and primary sector – especially dairy, wood and kiwifruit.

While the efforts of Fonterra, Zespri and entrepreneurial wine and honey exporters are to be applauded, and there has been some interesting activity in areas like film cooperation (Korean interests own Auckland’s largest film studio) and gaming, there is little sign of major growth in high-tech, manufacturing or services outside tourism.

Still there is much to celebrate. Twenty years ago, the idea of an FTA with Korea (or Japan) was hard to imagine. Both countries were highly protective of their agriculture industries, including sectors like apples, dairy and wine. In 2003, a Koren dairy farmer tragically killed himself in protest of the World Trade Organisation’s free trade policies during WTO ministerial talks in Cancun, Mexico.   

Philip Turner: "Further cause for concern is New Zealand’s continuing failure to diversify our exports"

Since then, Korea’s trade policy has evolved. New Zealand too has had to switch its policy from focusing on massive multilateral negotiations (remember the Doha Round anyone?) to bilateral and small-group FTAs.  In these negotiations smaller countries trying to negotiate with much bigger ones face huge disadvantages.   

Despite that, we have had substantial success. New Zealand now enjoys FTA-supported access into nearly all Asian markets. India is the big exception and even there some progress appears likely. The FTAs are not perfect: in the case of Korea, unfinished business remains in a couple of gnarly areas like milk powder, honey and mussels. But the playing field, to use the well-used metaphor, is pretty flat these days. 

Success in bilateral FTAs reflects – and offsets – the collapse of WTO negotiations and the overall erosion of multilateral rules in the last decade.

New Zealanders find it hard to get their heads around the fact that much of this change has been led by the United States turning to protectionism at home and bullying abroad.

The United States is the only top 10 world economy with which we have no free trade agreement – and indeed has just raised tariffs on our exports to 15 percent. Before the latest rise in tariffs, the US had overtaken Australia to be our second-largest trading partner (after China).

President Donald Trump signs an executive order on the administration’s tariff plans at a “Make America Wealthy Again” in April 2025

Ignoring the WTO is one thing; but the US has taken mutually destructive behaviour to another level with an incoherent and unpredictable approach to bilateral tariffs that is causing consternation in many countries including Korea and New Zealand.  

This uncomfortable reality is accelerating a hunt for innovative alternatives. Korea, along with Japan, the European Union and other major economies, has its back against the wall trying to defend itself against US tariffs.  Like New Zealand, it is also looking for ways to diversify its trade policy and reduce dependence on the US.   

The best answer anyone has come up with so far is small(ish) group FTAs that do not include the US.  Exhibit A is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP.  Conceived by New Zealand, Singapore and Chile, it now includes 12 countries and has become the global flagship for high-quality rules of trade.  With the UK joining last year, CPTPP now covers 15 percent of world GDP.  The list of countries wanting to join is long, inclduing China – and now Korea. 

A 2010 summit of leaders of the (then) negotiating states of the Trans-Pacific Partnership Agreement, a forerunner of the CPTPP

Under newly elected President Lee Jae-Myung, the Korean government announced early this month that Korea is once more considering joining CPTPP (it has thought about it a couple of times before, only to shy away from commitment at the last moment).  Korea already joined the Digital Economic Partnership Agreement (DEPA) alongside New Zealand, Chile and Singapore last year.  

In a time of turmoil and uncertainty in world trade, New Zealand and Korea share strong common interests in preserving as much as possible of world trading rules and mitigating bad behaviour by major economies.  CPTPP expansion is likely to be a part of that approach.  Ironically, one of the touted benefits of the Korea-NZ FTA was that it could help diversify New Zealand trade away from China. Now both sides are looking for means of diversifying away from dependence on the US.   

Trade is in turn just one part of the picture. US credibility in Asia has taken a hiding in the last year.  Korean public opinion towards the US is deteriorating. 

In a poll last month, 30 percent of Koreans said they did not trust the United States, up from 12 percent last year – and that was before last week’s controversial expulsion of more than 300 Korean workers from a Hyundai plant in the US. 

Whatever follows the Trump administration, the US now looks unlikely ever to recover the influence in the Asia-Pacific it enjoyed in the last three decades – in trade and other fields. 

Governments around the region are now having to grapple with issues of global security and governance without the familiar anchor of a stable US position – from Russia’s invasion of Ukraine to the Israeli destruction of Gaza, the diplomatic rehabilitation of North Korea, ever-rising tensions in the South China Sea, not to mention climate change. Back in 2019 New Zealand and Korea signed an MOU on hydrogen cooperation – but nothing seems to have happened on that front since.   

Regional countries have an increasingly urgent interest in finding friends, big and small, with whom they can work to strengthen cooperation, agree new rules and create innovative ways to prosperity.  In that context, the New Zealand-Korea FTA provides a strong platform, not just for more growth in trade but for an enhanced partnership to confront the demanding challenges of our time.

The Foundation's Asia in Focus initiative publishes expert insights and analysis on issues across Asia, as well as New Zealand’s evolving relationship with the region.