Thursday, August 18, 2022

EU standing firm on red meat access

European negotiators continued to stonewall demands from their New Zealand counterparts for increased market access for this country’s dairy and beef exports in trade talks in Brussels yesterday.

Sources close to the talks say it looks increasingly likely it will be left to Prime Minister Jacinda Ardern to try to break the deadlock as both sides attempt to meet a self-imposed deadline of an agreement by the end of the month. 

Ardern arrives in Brussels tomorrow for two days of meetings with the head of the European Commission Ursula van der Leyen among others. 

Trade Minister Damien O’Connor arrived in the Belgian capital earlier this week.

One source said the Europeans were sticking rigidly to very limited openings of the EU dairy market previously rejected by NZ negotiators.

“The EU tactics seem to be very much [to] stall.

“And it looks like they are leaving all the hard stuff for the ministers…at this stage it is our trade minister not the PM but the last roll of the dice could be the PM,” the source said.

A meat industry source in Brussels said similar stonewalling tactics were being used by the Europeans in discussions on beef market access.

The source said EU negotiators had offered to cut in-quota tariffs for NZ beef imports but refused to discuss how large the quotas could be.

Instead the Europeans had dwelt on the technicalities of how any increase in quotas would be administered.

“They are skirting around the volumes and talking about how you would administer things which is fine and needs to be done but really it is the wrong way around because you really need to know the volume and the administration stuff is just tidying stuff up.

“We would say there is still quite a way to go before we would be at what we would call a commercially meaningful outcome.”

Only marginally better progress had been made on sheep meat access, with the offer of “tens of thousands” of tonnes of new quota to add to NZ’s existing tariff-free entitlement of 114,000 tonnes.

That is short of the 228,000 tonnes negotiated during the Uruguay round of global trade talks in the 1990s.

That quota was split in half following the United Kingdom’s exit from the EU last year.

The industry had hoped the quota might have been restored during these talks when the Government dropped its objection to the split at the World Trade Organisation earlier this year.

However, EU negotiators had used NZ’s failure to fill the quota in recent years to justify its low-ball sheep meat quota offers, the source said.

“We say things might change and then they turn around and say you are going to flood our market then.

“They fear if something happens in China we are going to send a whole bunch of product.

“Our argument is that we do have a lot of options [and] we have got 120 markets that we send to and there is no benefit to us of putting product into an underperforming market.

“If China goes funny then we have to look at diversification but it would not simply be transferring [product] from one market to another it would be more broadly and where we are going to generate returns globally.”

Asked what additional arguments Ardern had left to deploy with European leaders to get a deal NZ’s key exporters could accept the source said matching up the record of NZ’s pastoral industries with the EU’s sustainability agenda was key.

The EU had come in for criticism in recent years for signing agreements with trade partners with low sustainability credentials such as the South American trading bloc Mercosur.

That was not the case with NZ farmers which could be credited with higher environmental standards and efforts to account for carbon emissions from livestock.

“The Europeans are really quite keen to be using trade as one lever in moving towards global sustainability.

“You have got a country like NZ that has got the same standards in terms of production as you have in Europe and we have the same commitment in terms of climate change.

“If you accept that NZ has equivalent standards and has the same values…well if you can’t do a deal with NZ how can you do a deal with anyone?

“So I think it is those soft messages that we have to strengthen our hand.” 

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