Friday, December 1, 2023

Export trade deals go on hold

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It looks like another year of treading water for New Zealand’s trade negotiators as they wait for pieces of the global trade jigsaw to fall into place.
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There were slim pickings for NZ farmers from the deal completed last year with China and another with the 15 countries of the Regional Comprehensive Economic Partnership (RCEP).

The value to NZ exporters from RCEP nosedived when India walked away in November over concerns for its own farmers about opening its local market to NZ and Australian dairy products.

The upgraded free-trade deal with China also yielded little after the removal of safeguards costing NZ dairy farmers $100m a year was dropped as a negotiating objective. 

The challenge for NZ negotiators in 2020 will be making progress in talks for free-trade deals with the European Union and Britain.

The EU and NZ began talks in 2018 and had hoped to have them wrapped up by the end of last year.

But the EU’s refusal to budge on agricultural market access meant that deadline passed without a deal in sight.

The recent trade deal between the EU and the South American trading bloc of Mercosur further complicates the picture, according to the Government’s outgoing agricultural trade envoy Mike Petersen.

The trade negotiators of the European Commission have enraged the continent’s farmers by cutting the tariff on 99,000 tonnes of beef imports from 20% to 7.5% over a six-year period.

“There is a lot of angst towards the Mercosur agreement and the volume of beef coming in.

“The emotion about Mercosur is spilling over into any talk about NZ and Australia completing a trade agreement with the EU in 2020,” Petersen said.

While negotiations have concluded with Mercosur the EU’s member states are still to ratify the deal. It could yet fail if EU politicians listen to farmers and reject it.

Also standing in the way of NZ concluding a deal with the EU is the renegotiation of the trade relationship between the Europe and Britain after Brexit. The two sides have given themselves till the end of 2020 to conclude a deal.

Petersen thinks it will be hard for NZ negotiators to get any sense out of their counterparts in Brussels on agricultural market access until a deal between the EU and Britain is done.

Until they can confirm continued access for 300,000 tonnes of Irish beef into the British market it will be difficult for EU negotiators to offer improved access for NZ beef.   

The same uncertainty will slow progress for a free-trade deal with Britain, which NZ is free to pursue now Brexit has been confirmed.

It is no stretch to imagine British negotiators digging their toes in over NZ sheep meat quota while access for British lamb to the EU remains up in the air.  

“There is going to be a lot of what-ifs and ‘how can we negotiate a deal if we do not know what the United Kingdom is doing with Europe?’

“And the UK will say ‘hang on we have got to do Europe first’.

“You can just see everything is going to be pushed into the same bucket.

“And I think, to be honest, it is going to push everything out until 2021,” Petersen said.

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