Friday, August 12, 2022

Dairy industry dismayed at EU FTA

The dairy industry is questioning the Government’s arguments for not walking away from a sub-standard trade agreement signed with the European Union overnight.

In media interviews this morning Trade Minister Damien O’Connor said he accepted dairy and meat exporters might not have got as much out of the deal as they had hoped for.

But he said political attitudes to free trade in the EU were hardening and it was better to take what had been offered rather than risk getting even less or nothing at all in the future by waiting.

Asked to rate it out of ten O’Connor gave the deal, which will scrap tariffs on a range of second-tier exports such as kiwifruit, wine and honey, an eight.

However that’s not how the dairy industry sees it.

A senior executive at a major dairy exporter, who didn’t want to be named for now, described the deal as “a shocker”.

The executive said the Comprehensive and Progressive TransPacific Partnership (CPTPP) trade deal had delivered limited market access gains for the dairy industry but the deal with the EU was even worse.

“It is the worst FTA outcome NZ has ever negotiated.”

The executive questioned the rationale for signing the deal now when it delivered virtually nothing for NZ’s biggest export industries.

“Our view would be if this was the best that could be delivered through the window that was open at the moment we would rather take our chances in a different window in a different time.

“It is very hard to predict the future but this is such a bad deal for dairy and meat I struggle to see [O’Connor’s] argument as a compelling one.”

The executive said the decision to accept a substandard deal with EU had set a bad precedent which would come back to haunt the dairy and meat sectors in future trade negotiations.

“We have agreed to an absolutely minimalist outcome on dairy with one of the world’s largest dairy markets.

“It establishes a very clear precedent and where that precedent will be relevant will be is down the track.

“We were always concerned about the precedent that TPP set but this is a worse precedent.

“It would hardly be surprising if US negotiators at some point in the future when we were negotiating didn’t see this as a pretty strong indication of where the landing zone was going to be.”

The executive expressed some sympathy for the Government’s position but still didn’t think it should have signed the deal.

“I am blaming EU protectionism. The EU has been the centre of global agricultural protectionism for 50 years and we have just had it reinforced to us that it remains thus.”

Speaking to Farmers Weekly before the deal was struck with the EU former trade negotiator Charles Finny said the Government would have to some degree taken its lead from the EU on whether now was the best time to agree a deal or whether to wait and resume negotiations later.

“You start to get into new election cycles if you wait. That is another reason to get it done quickly.

“It is a funny world at the moment and you just cannot predict what sort of legislatures you are going to be dealing with and right now I think was a sweet spot.”

Finny said the recent French parliamentary elections could also have played a role with protectionist parties on both the left and the right having made major gains.

“The EU have targeted this period of late June and early July straight after the French elections to hit them while they are distracted and getting used to the new Government and legislature to try and ram it through.”

Before the agreement can enter into force it must be ratified by the European Parliament as well as NZ’s.

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