(Bloomberg) -- New Zealand has become the second country to secure a post-Brexit free-trade agreement with the U.K., in a deal that aims to eliminate all tariffs on exports and eventually boost the South Pacific nation’s economy by almost NZ$1 billion ($720 million).

New Zealand Prime Minister Jacinda Ardern said the two countries had agreed the FTA in principle, with the text to be finalized over coming months.

“This deal will cut costs for exporters immediately, creates opportunities for New Zealand businesses to grow and diversify their trade, while boosting the economy as we recover from Covid-19,” Ardern said in a statement Thursday in Wellington. “It’s one of our best deals ever and secured at a crucial time.”

The FTA marks the U.K.’s second deal with a major ally that goes beyond rolling over a pre-existing European Union trade relationship after Australia secured an in-principle agreement in June.

New Zealand said the U.K. will remove most tariffs on its existing exports to the country -- including wine, honey, onions, some dairy products and most industrial products -- as soon as the agreement comes into force. This is expected to save exporters NZ$37.8 million a year based on current export volumes, Ardern said.

However, tariffs on exports including butter, cheese, beef and sheep meat, seasonable apples and some fish will slowly be removed over the next 15 years. 

“Beef volumes will increase from 12,000 tonnes to 60,000 tonnes, and for sheep meat they will rise from 149,205 tonnes to over 164,000 tonnes, with free market access after 15 years,” Ardern said.

Pre-Covid estimates project that once the deal is fully implemented, New Zealand goods to the U.K. will increase by as much as 40% and that New Zealand gross domestic product will receive a boost of as much as NZ$970 million, she said.

“Progressing this FTA will also give a significant boost to the U.K.’s efforts to expand its engagement in the wider Indo-Pacific region, which New Zealand warmly welcomes, and as it pursues accession to the region’s premier trade agreement, the CPTPP,” Ardern told a news conference in Wellington. 

New Zealand expects work on the FTA to be completed next year.

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