Friday, December 8, 2023

Brexit looms as market uncertainty grows

Neal Wallace
Meat exporters are preparing for trade disruption in their key UK market with the likelihood an exit agreement with the European Union will not be reached by the December deadline.
Reading Time: 3 minutes

Sirma Karapeeva | November 17, 2020 from GlobalHQ on Vimeo.

Government agencies are advising exporters to prepare for possible distribution, congestion and delays in UK ports in the New Year, as new export processes, IT systems and export certificates are introduced.

The UK is in a transition period with the EU that ends on December 31, during which they are negotiating a split from the common market, affecting trade, political and security relationships.

Until then, the UK remains in the EU customs union with existing trading arrangements, rules and regulations applying, but these expire on January 1.

Meat Industry Association (MIA) chief executive Sirma Karapeeva says trade is further complicated by the EU and UK decision to unilaterally halve New Zealand’s 228,000 tonne sheepmeat quota between the two markets and to apportion New Zealand’s high quality beef quota into commercial unviable parcels from 1 January 2021, a move rejected by NZ. The UK’s own Global Tariff will also come into force then.

“For our purposes and because we are still entitled to country-specific quota albeit at a smaller volume, for sheepmeat we should not be affected unless we trade outside that quota. The situation is worse for beef where the UK share of our country-specific quota is just over 454 tonnes – a commercially unviable allocation essentially rendering the quota useless. Out of quota exports will face a tariff of over 12% ,”  Karapeeva says.

NZ has not filled that quota for some years but tonnages in recent months have been higher than previous years as companies shift product due to covid-19 distorting markets.

Karapeeva says exporters and trade organisations have been preparing for every possible scenario for product arriving in the UK from January 1, ranging from complete chaos to business as usual, but planning was difficult.

“We are living in a vacuum,” she said.

“We do not know where the EU-UK bilateral deal will end up and the implications for third country traders.

“Time is ticking and we are very uncomfortable as we still do not know our position as we come down to January 1.”

If there are issues, she says it will most likely be with the UK, as it has to develop new trade systems, documentation and structures.

Little change is expected for access to the EU.

The Ministry of Foreign Affairs and Trade (MFAT) and Ministry for Primary Industries (MPI) have been working to try and streamline those systems.

Exporters are rejecting the splitting of NZ’s sheepmeat quota, which Karapeeva says not only violates NZ’s rights under the World Trade Organisation (WTO) but limits the ability of companies to commercially respond to market signals.

The Government has raised concerns on behalf of the meat industry, but Karapeeva says discussions do not appear to be progressing.

“Conversations are not going well as far as I can gleam,” she said.

A MFAT spokesperson told Farmers Weekly in a statement it is seeking under urgency the preservation of current access quotas to both markets from January 1.

“Proposals to split these quotas on the basis of recent trade flows will reduce NZ’s access, including removing the flexibility exporters have now to move product according to fluctuations in demand,” she said.

The agreement being sought will not leave NZ any worse off after Brexit.

Negotiations for a NZ free trade agreement are continuing, with a second round of talks completed with the UK, which MFAT says made progress and had “a high level of commonality and shared ambition.”

“We have agreed on a number of actions for the coming weeks, including working towards an initial exchange of goods market access offers, to ensure we continue to build momentum in advance of our next negotiating round in early 2021,” she said.

A third round of negotiations is planned for late January.

Progress has also been made with a free trade agreement with the EU, but agricultural access remains a challenge.

“We were disappointed by the EU’s revised offer put forward at the last round and have made our view clear that it does not yet provide us with a platform to conclude negotiations,” she said.

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