In what may prove to be the first such deal globally, the New Zealand government said it had commenced negotiations with Russia over free trade agreements. The New Zealand Herald said New Zealand may become the first country in the world to start free trade deals with Russia. New Zealand Prime Minister John Key announced the government’s decision to officially commence the negotiations with Russia.

John Key met his Russian counterpart, Dmitri Medvedev during a one-on-one meeting between them at the APEC summit in Japan. However, New Zealand Trade Negotiations Minister Tim Groser declined to state the expected value in terms of finances for the proposed deals and their benefits for New Zealand exporters. He however argued that any predictions at this point would amount to conjecture.

However, Russia is seen as an increasingly well-off society with burgeoning demands for consumer goods. It already imports large quantities of food. Groser said the deal was all about "future-proofing" New Zealand, which exports around $180 million worth of goods to Russia each year, mainly butter sheep, meat, fish and cheese.

Much of the deal has already been "pre-cooked", meaning substantial progress has already been made. New Zealand was also the first country to secure a free trade agreement with China, which has seen two-way trade nearly double since it came into force.

Russia's motivation for the deal is to prove itself as a responsible trading partner and boost its case for membership of the World Trade Organization. New Zealand gets special access to a rapidly growing and increasingly wealthy consumer market. The free trade deal will provide a massive windfall to Kiwi exporters.

Prime Minister John Key and Trade Minister Tim Groser say the huge market will "future proof" the Kiwi economy. Kiwi farmers will be the big winners. Russia is the third largest importer of dairy products in the world - expensive tariffs and barriers will be dropped.

The Economy of New Zealand is a market economy which is greatly dependent on international trade, mainly with Australia, the United States of America, China and Japan.

It is strongly dependent on tourism and agricultural exports, and has only small manufacturing and high-tech components. Economic free-market reforms of the last decades have removed many barriers to foreign investment, and the World Bank has praised New Zealand as being the most business-friendly country in the world.

14 Nov 2010.