Tuesday, December 5, 2023

Savouring a victory in trade dispute

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Bizarrely, Canada is also claiming the win as NZ triumphs in CPTPP tribunal, writes Craig Page.
As part of the CPTPP free trade agreement, NZ is entitled to dairy quota access amounting to 3.3% of Canada’s market. Photo: Cedric Fauntleroy/Pexels
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When it comes to the business end of a global sporting competition, any win is a good win.

We saw that at the recent FIFA Women’s World Cup, held in New Zealand and Australia, and we’re about to go through it all again as the Rugby World Cup in unfolds in France. 

Once pool play is over a loss – as brave as it may be – simply isn’t good enough to remain in the competition.

It is all about winning, no matter how ugly.

That analogy could apply to NZ’s victory over Canada last week regarding access to its dairy markets.

Canada was found guilty of playing the man (or in this case, the country) and not the ball in regard to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

As part of the CPTPP free trade agreement, NZ is entitled to dairy quota access amounting to 3.3% of Canada’s market. This equates to tens of thousands of tonnes per year in key dairy products for NZ’s exporters.

However, NZ found it was being blocked, and raised concerns that Canada was manipulating quotas – something that has cost this country $120 million in lost revenue over the past three years. 

An independent panel ruled in NZ’s favour and found NZ exporters were not able to fully utilise Canada’s 16 dairy tariff rate quotas and that Canada was granting priority access to its own domestic dairy processors. 

It is something of a groundbreaking ruling. It was the first CPTPP trade dispute and NZ’s first under a free trade agreement.

Trade and Export Growth Minister Damien O’Connor labelled it a significant win for NZ producers.

“Canada was not living up to its commitments under the CPTPP by effectively blocking access for our dairy industry to upscale its exports. That will now have to change,” he said.

Others described it as a solid victory for our dairy exporters. 

In reality, the result was hardly a trouncing. NZ did enough to take the victory, but Canada is not required to provide compensation to make up for the loss of quota earnings over the three-year period.

Somewhat bizarrely, Canada is also claiming the win, saying it’s “very pleased with the outcome of the panel’s report, which is a clear victory for Canada”.

Those claims come despite Canada being told to change and align itself with the principles of the CPTPP – the equivalent of a yellow card in sport.

NZ relies heavily on free trade agreements. Since 2017 seven new or upgraded agreements have been reached and this year primary sector exports have grown to record heights of $57.4 billion. Such agreements are the lifeblood of not only NZ farmers, but of primary producers throughout the world who are keen to find international markets for their products. 

Winning this battle was vital for the credibility of all free trade agreements and it will give exporters confidence that processes are in place to ensure they get the market access that was negotiated.If NZ had lost you could have argued that free trade agreements are not worth the paper they are printed on.

While the result may not have been everything NZ was looking for, at this stage of the game a win is what matters most.

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