European quotas for NZ sheepmeat, dairy and beef are due to be split between the pair when the UK completes its exit from the EU on December 31.
The quota is to be divided up between the UK and the remaining 27 member states of the EU based on how much NZ exporters sold into those respective markets between 2013 and 2015.
NZ has long opposed the split, which it says reduces the value of the existing quota by curtailing the flexibility of exporters to move between the two markets and is illegal under international trade rules.
In the case of sheepmeat, NZ’s current right to sell 228,000 tonnes without incurring a cent in tariffs would be divided down the middle between the UK and continental Europe so that NZ exporters could only sell up to 114,000t to either before tariffs kick in.
At the most recent meeting of the World Trade Organisation’s (WTO) Committee on Market Access on November 12, officials from NZ criticised the UK and EU’s “limited engagement” with concerns from a number of WTO members about the proposal to split the quotas.
“The time is now for the EU and the UK to demonstrate it has heard these concerns and that it is ready to bring to the table meaningful answers to address them,” a NZ official said.
Any changes to market access arrangements should be in line with the General Agreement on Tariffs and Trade which states no WTO member should be left worse off by any trade agreement by any other member, the official said.
NZ’s comments were endorsed by Russia, the United States, Canada, India, Australia, Mexico, Paraguay and Uruguay.
The EU said it was continuing to consult WTO members, declaring “good progress” was made at the last round of talks in October.
“The EU welcomed the increased engagement of many members and said it stood ready to make progress paving the way towards a constructive finalisation of discussions with as many members as possible by the end of the year,” a Geneva-based trade official said.
“In the same vein, the UK reiterated its commitment to engaging in good faith with members in … negotiations and to building on the progress and constructive conversations of recent negotiations.”
Geneva-based journalist and former WTO official Peter Ungphakorn says because the UK remained part of the customs union until the transition period expired at the end of the year, it could not yet officially deviate from the proposal it agreed with the EU for splitting the quotas.
“After the transition it is free to do what it wants,” he said.
“Taken at surface value at least, some of the language used suggests the UK might be more flexible than the EU.
“It’s possible that after the transition, the UK might be willing to expand some quotas through a memorandum of understanding or some other document.
“It could certainly be done through new free trade agreements, which would bypass the WTO process completely.”
NZ has previously opposed bypassing the WTO and said trade agreements with the EU and the UK were to improve market access and not restore rights withdrawn illegally.
However, Ungaphakorn says a case at the WTO could be difficult for NZ to win.
“Some lawyers argue that the UK and EU are fully within their rights to split the quotas this way under WTO law,” he said.
“They say WTO law treats quotas purely as numbers, not the commercial value of access to the markets.
“If they are right, then the other countries stand little chance of winning a legal challenge in the WTO.”
The Meat Industry Association’s chief executive Sirma Karapeeva was not convinced legal action was NZ’s best bet.
“The Government is continuing to put pressure on the EU and the UK to come to the table and I think that has to be the first course of action to try and collectively resolve this in some constructive and collaborative way before we try to explore dispute settlement options which are slow,” she said.