Thursday, December 7, 2023

Small cheese in leaked trade deal

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Trade Minister David Parker has reacted with surprise and disappointment at news a leaked trade deal between New Zealand and the European Union contains little of benefit for NZ.
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“I am disappointed by the leak but also at the quality it offers. 

“It sends a very negative signal,” he said.

Parker was speaking at the launch of a covid-19 trade recovery strategy, addressing the NZ Institute of International Affairs.

The leaked details appeared in European trade publications and while full details are unconfirmed it is understood to contain an allowance for only 15,000 tonnes of cheese exports from NZ to the EU over a decade.

Parker described the uneven playing field NZ exporters were expected to play on in Europe as unacceptable.

“To take one example in terms of the recently leaked offer. In 2019 the EU exported tariff-free the equivalent of 1kg of cheese per New Zealander. 

“By comparison, the EU is offering access for just over three grams of NZ cheese per EU citizen. Even then that is subject to volume restrictions and that is also subject to restrictions. This is not a workable way to conclude our long-running trade negotiations.”  

The trade imbalance between the EU and NZ is 2:1. 

Parker said it is frustrating NZ is the last liberal democracy not to have a trade agreement with the EU.

“It is clear the EU will need to address this imbalance. 

“I ask how else post-covid would NZ maintain a social licence for trade. I am speaking tonight with my counterpart, EU Trade Commissioner (Phil) Hogan to register very clearly my dissatisfaction and disappointment with this offer as well as the fact of its leak.”

Parker outlined his broader concerns over covid global trade conditions hinting at a tightening of borders, greater protectionism and a breakdown in the mechanisms that maintain free trade, including the World Trade Organisation.

“As the crisis unfolded I think we were all alarmed at the sudden uptick in protectionist measures. 

“At one point nearly 80 World Trade Organisation members had notified more than 100 new barriers or other restrictions in place. To make matters worse some of the major economies started to introduce further subsidies for their farmers. 

“The direction of travel was worrying.”

But Parker reiterated the Government’s commitment to restoring and growing trade links and value to boost the NZ recovery.

“The trade recovery strategy sets out how we will achieve that.”

The first part of the three-part policy is supporting exporters, particularly smaller to medium sized ones. The $200 million plus set aside in the Budget is now being channelled into budgets of NZ Trade and Enterprise and Ministry of Foreign Affairs and Trade to double the number of exporters those agencies can provide advice to. This will boost the departments’ capacity for advice to 1400 exporters. 

“In the short to medium term this is support to exporters in-market. It is harder for them to travel themselves, harder to form new relationships, it is pretty hard to assess the market risk, who is reliable and who is not.

“The network of posts we have around the world through MFAT and NZTE is probably the most important resource we can offer additional support through at the moment.”

The second plank of the strategy is to try and re-invigorate international trade architecture. 

Parker described the WTO as moribund and covid-19 has reinforced the need for a functioning international rules-based system.

“We will be working to shore up the WTO as well as expanding and developing our network of regional and bilateral freeo-trade agreements.”

The third aspect of the strategy is to refresh key trading relationships, filling the forward pipeline with trade negotiations including EU, Britain and South America to provide exporters with more choice.

While Parker remains adamant trade is vital to get NZ through the crisis he is also emphatic there needs to be a balanced level of trade that benefits all New Zealanders and the EU issue has his ire.

“Every country NZ has a sound trade relationship with, our trade is broadly in balance. It is generally more unfair where we don’t have one, like the EU.”

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