Monday, March 4, 2024

Relief for NZ in new EU trade rules 

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Parameters mean country escapes crackdown on deforestation.
Food in New Zealand is by its nature produced on deforested land – but according to new EU rules, the land was cleared too long ago to attract fines.
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New Zealand believes it may have scored a win when it comes to the European Union’s tough new rules on deforestation.   

The EU has reached provisional agreement on deforestation-free supply chain regulations, which aim to ensure that key goods sold in the EU will no longer contribute to deforestation and forest degradation.

Companies will have to conduct strict due diligence if they place on the EU market, or export from it: palm oil, cattle, soy, coffee, cocoa, timber and rubber, as well as derived products such as beef, furniture, or chocolate. 

Goods grown on deforested land could attract fines of up to 4% of a company’s turnover in any EU member state.   

The EU says the commodities have been chosen on the basis of a thorough impact assessment identifying them as the main driver of deforestation due to agricultural expansion. 

Sheepmeat is not on the list and industry leaders in NZ say the parameters of the new rules mean NZ beef may be in the clear as well. 

NZ authorities had been concerned, because NZ beef products are clearly produced on deforested land.

However, the EU law in the end set the cut-off date for deforestation at 2020 and most NZ deforestation happened decades ago, some of it even during the 19th Century.  

A senior manager at Beef + Lamb NZ, Frances Duignan, said the EU would be “looking at our aforestation rates and our deforestation rates since 2020”.  

“We have got a really good case, we have gone through significant aforestation, largely driven by carbon farming and land use changes, since 2020. 

“So we have got a very good case to be made to be considered low risk … compared with Brazilian beef or beef from the US or a range of other different places.”

Meanwhile, deforestation rules are not the only problem emerging in Europe.     

Another is so-called “mirroring”, which could one day undermine some of the benefits of the NZ-EU free trade agreement.  

Mirroring, an idea pushed by France, declares that all imported food should be produced under the exact same standards as those in the EU.

Allied to this is the EU’s so-called Farm to Fork strategy, which aims, among other things, to have 25% of all agricultural land under organic farming by 2030.

It could be very costly if NZ farmers were obliged to mirror this in order to trade with the EU.   

To NZ’s advantage, there is doubt even within Europe that the EU has the legal right to impose mirroring unilaterally.    

Furthermore, the war in Ukraine has focused attention on food security, pushing the issue of mirroring to the background.  

But it has not gone away.   

NZ officials said mirroring is an unfair addition to established patterns of trading.  

They said equivalance, not mirroring, is the agreed method for determining trading partners’ commitment to common sanitary, animal welfare and other standards.  According to the principle of mirroring, exporting nations must do exactly the same things as importing nations to achieve those standards. According to the principle of equivalance, exporting nations may do different things as long as they have the same effect.   

NZ believes the latter is the right way to go.   

The principle was established by years of trade talks connected with the Uruguay Round.    

And both trade officials and government ministers believe there is a risk that mirroring could be used disingenuously as a means of keeping out competition.

Even in Europe, there are calls for mirror clauses to be examined carefully to prevent their misuse.

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