Tuesday, December 5, 2023

Hope of early start to UK trade deal slips away

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All eyes now on Welsh parliament to pass final bit of legislation.
The passage of a piece of secondary legislation in the Welsh parliament, or Senedd Cymru, is taking longer than expected and holding up the start of New Zealand’s free trade deal with the United Kingdom. Photo: Wikimedia Commons
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There is increasing uncertainty over exactly when exporters will be able to take advantage of New Zealand’s free trade agreement with the United Kingdom. 

Expectations that the deal could come into force ahead of schedule in early May seemed to be confirmed when the Trade (Australia and NZ) Bill 2023 received Royal Assent in the UK in late March. 

Several pieces of so-called secondary legislation still needed to be ticked off, however, before the deal’s start date could be agreed with NZ. 

Trade Minister Damien O’Connor said at the time that the British government had advised him that secondary legislation was on its way to being passed and the agreement was set to enter into force in the first half of this year. 

Farmers Weekly understands that industry groups were given a signal around this time that the start date was likely to be the first week of May. 

Now it can be revealed that a single piece of secondary legislation needing to be passed by the Welsh parliament – relating to changes to government procurement rules it must now follow as a result of the trade deal with NZ – is taking longer than expected and is holding up confirmation of the deal’s start. 

An early May start for the trade deal is now off the table and there is uncertainty over exactly when the Welsh parliament will get around to passing the legislation. 

“We were working to [entry into force] of early May. That was where it was for a number of months.

“This could shift it out to the first or second week of June,” a source briefed by NZ officials said. 

However the source said there is uncertainty around exactly when the legislation will be presented to the Welsh parliament and what will happen if it is not passed in the next session. 

The Welsh parliament is due to convene again in early May and sit for a period of 40 calendar days, including recesses. 

“We do not have 100% clarity on when the Welsh are going to introduce the secondary legislation,” the source said.

“If they take the 40 days then that takes us to the end of June.

“You are not talking about a delay to any great degree but it is frustrating.” 

The source added that although NZ officials are hopeful the legislation will be passed during the Welsh parliament’s next session, there are no guarantees. 

“Basically the tariff schedule has been released with a note that says the UK government will advise by letter of the entry into force date and that is as much as we know at this stage.”

The source said the majority of the Welsh parliament is understood to support the free trade deal with NZ and there is no suggestion at this stage that it intends to derail its implementation by delaying the secondary legislation.

But there is frustration with officials in Westminster that they have been unable to get to grips with the relevant legislative timetables since the main legislation was passed in the House of Commons in London.

The source said this is possibly due to inexperience on the part of British trade officials. 

“They have been in the EU since 1973 and there has been no precedent for the past 50 years because they just haven’t been doing trade deals.” 

Eyebrows were further raised after the British only communicated the possibility of a delay the day after the UK had been formally accepted into the Comprehensive and Progressive TransPacific Partnership trade deal by its 11 existing members including NZ. 

“The timing was interesting,” one source said.

Beef + Lamb NZ’s regional manager for the UK and Europe, Alex Gowen, remained hopeful the deal could enter into force by the middle of the year as originally hoped for.

He said delays are frustrating for exporters who need certainty so that they can plan marketing and logistics.

This was particularly the case for beef exporters, who are anxious to take advantage of significant increases in tariff-free quotas as a result of the deal.

“As far as sheepmeat is concerned we have ample access relative to our marketing needs, but on beef it is important to have early clarity on timeframes.”

It is understood Australian beef exporters have been stacking up product in bonded warehouses in the UK ahead of an early-May start date for their own deal, which begins on the same day as NZ’s. Those exporters are now having to roll over those storage agreements at additional cost.

A dairy industry source said NZ dairy exporters are relatively relaxed at this stage about any delays.

The source said that might change the closer entry-into-force gets to the start of the next calendar year. 

A delay to implementation past January 1 next year would see the second annual tranche of tariff cuts on dairy products rolled over into 2025.

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