Thursday, August 11, 2022

Walking away from EU deal not worth the risk

Deputy secretary for foreign affairs and trade Vangelis Vitalis says walking away from the EU FTA would have meant a lower quality agreement the next time New Zealand came to the negotiating table.

A top New Zealand diplomat says NZ risked being shunted to the back of the line for future trade agreements with the European Union if it walked away rather than sign the newly minted FTA.

If NZ had walked away and returned, it is doubtful the deal would have been better, Ministry for Foreign Affairs and Trade deputy secretary Vangelis Vitalis said.

“What could we bring to the table if we were to re-start those negotiations and where would we be in the queue? There was no doubt in my mind that if we were to leave, we would be put at the back of the queue,” he told farmers and industry leaders at the Primary Industries of New Zealand Summit in Auckland.”

He also has no doubt the EU would be even more protectionist given the current geopolitical landscape on the continent. 

“A small country walking away from a big country, where the big country does not need you, is a pretty tough call,” he said.

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Fresh from helping negotiate the FTA agreement with the EU in Brussels, he gave a brutally honest assessment about how tough the negotiations were with the most protectionist agricultural block in the world.

“These guys operate in a completely different paradigm. I can’t tell you how challenging it’s been over the past four years to be speaking to 27 countries that believe that FTAs are actually about managing New Zealand’s access into the market.”

He says it “beggars belief” that his EU counterparts thought that giving New Zealand 0.1% of their market risks destabilising it.

New Zealand currently has almost no preferential access into that market and was currently not operating on a level playing field. 

It was also a completely different negotiation to the UK FTA where New Zealand had more leverage.

“People in the room might not want to hear this, but when we were negotiating with the EU, we are worth nothing to them.”

From the EU’s perspective, they see five million consumers and already had access to NZ’s market. 

When that came to the negotiations, Vitalis said he was constantly asked: “what’s in this for Europe?”

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The EU was more interested in getting access to the larger Australian market.

He shared the frustration been vented in the meat and dairy industries regarding where the FTA landed, labelling it shameful.

“But also let’s be honest that our current levels of access are negligible to nil,” he said.

The EU’s equivalent of Federated Farmers reacted to the FTA by describing it as dairy and red meat being sacrificial lambs with dairy farmers paying a “very high price”. 

These groups were already holding crisis meetings in response, he said.

“There’s going to have to be a huge diplomatic process to get this across the line and we’re by no means done.”

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