Thursday, August 18, 2022

Devil in the details of EU deal

Free trade agreement’s finer points are still being worked out – and not all of them are going NZ’s way, says Beef+Lamb policy tsar.
The free trade agreement’s finer points are still being worked out – and not all of them are going NZ’s way, says Beef+Lamb general manager for policy and advocacy Dave Harrison.

Meat exporters are already facing a watering down of their new access to the European Union market, just weeks after New Zealand apparently concluded a free trade agreement with the bloc.

Prime Minister Jacinda Ardern travelled to Brussels in Belgium last month to clinch the deal with the EU after four years of negotiations.

But Beef+Lamb NZ’s general manager for policy and advocacy Dave Harrison said negotiations between the EU and NZ had not stopped with the PM’s announcement.

“What was agreed in Brussels was the high-level agreement and there were still things to work through,” he said.

The Ministry of Foreign Affairs and Trade posted more details of the agreement on its website this past week.

For example, it can now be revealed that the 5,400 tonnes of new sheep meat quota announced last month, rising to 38,000 tonnes after seven years, includes a cap on the volume of chilled product that can be exported tariff-free.

Only a third of the new quota can be filled with higher-value chilled cuts.

NZ’s existing 125,000 tonne sheep meat quota for the EU does not face such restrictions and remains untouched.

The restriction on the new quota adds fresh disappointment to what was an already very disappointing deal for meat exporters.

Read: Walking away from EU deal not worth the risk

“Pragmatically it probably does not make a huge amount of difference but as a matter of principal it does because you are not able to send the product the market is asking for,” Harrison said.

However, NZ negotiators had managed to gain more flexible terms for the 10,000 tonnes of new beef quota created.

“It will be more liberal than our current [quota], which only allows carcases of a certain weight and must meet certain carcase classifications,” he said.

“So that is a positive in terms of having a little bit more liberal access around what beef we can send in.”

Still, the industry is disappointed with the overall quota volumes achieved, which remain a drop in the bucket compared to the 4.5 million tonnes of beef consumed in the bloc each year.

“Our main concern is around the volume rather than conditions of access,” he said.

Harrison said it could be another six months before the final text of the agreement is released.

Despite the ongoing negotiations he is confident the details most important to the meat industry have already been nailed down.

An undertaking from both sides to uphold their Paris climate change commitments has already been announced.

Also read: PM’s comment hurt EU trade negotiations

Any additional environmental or animal welfare provisions are unlikely to trouble NZ farmers or exporters, he said.

“The interesting thing about what the EU is trying to do with our deal is trying to set a precedent with how you link trade and sustainability,” he said.

“We are in a fortunate position that a lot of our standards have followed the way the EU has moved in recent years.

“Part of the EU strategy is to limit access to other countries based on the likes of NZ agreeing to those standards.”

Dairy Companies Association chair Malcolm Bailey said he is waiting for more detail on how the ongoing negotiations will affect new dairy market access.

“Quite a bit of stuff was left in unwritten form when they concluded because it was all a bit of a scramble at the end. So I am not surprised and we are worried about it.”

The dairy industry is already disappointed about the small quotas achieved for key products, and has questioned whether even those can be filled because of high in-quota tariffs, which it has said will make them unusable much of the time.

For that reason it has said that the eventual $600m in annual gains estimated by the Government from the deal for the dairy sector is a vast overestimate.

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