Prime Minister Jacinda Ardern, who helped negotiate in Brussels, said it would help grow exports to the European Union by $ 1.8 billion a year by 2035.
Ardern scaled down hopes of an agreement earlier this week, saying she was “very willing to leave Europe without a final closure” if it did not provide significant market access.
But around noon Brussels time, final talks were concluded by New Zealand’s chief negotiator Vangelis Vitalis and trade minister Damien O’Connor, just hours before Ardern was scheduled to leave Brussels for London.
“Despite many challenges, we got there, and today we are delivering an agreement that represents improved trading opportunities for our exporters,” Ardern said when announcing the agreement with European Commission President Ursula von der Leyen.
A full 91 percent of rates will be eliminated on the day the agreement takes effect, with 97 percent eliminated by the seventh year.
Parmesan safe but says au revoir to New Zealand made feta
It was feared that New Zealand’s primary industries and cheesemakers would be big losers under the agreement, with cheesemakers being forced to stop using names such as parmesan, gouda, halloumi, mozzarella, brie and camembert, which the EU is trying to protect. has for use by European producers under its system of geographical indicators, or CIs.
These fears have not been fully realized, with New Zealand retaining the right to use the names of many well-known cheeses.
New Zealand cheesemakers can still name their cheeses camembert, gouda, halloumi, mozzarella and brie. Producers currently making parmesan may continue to use the name, but will no longer be able to, once the agreement enters into force – when that happens, the only new producers of parmesan will have to come from the Italian region of Parma.
Producers who have been making Gruyère for more than five years will still be able to use the term, but no one but its traditional European manufacturers will.
The only losers of the CIs transaction are producers of feta and port, which will have to abandon the terms within nine years of the entry into force of the agreement. From then on, the only products sold as feta and port in New Zealand will have to come from Greece and Portugal.
New Zealand producers may continue to make these products, they will just have to call it something else.
Red meat sector unhappy
New Zealand has achieved some victories for primary industries, but some in the sector have said it is not enough.
Dairy and beef are expected to receive $ 120 million in new export revenue from the date of entry into force of the agreement, which will grow to $ 600 million within seven years. On beef, for example, New Zealand will be allowed to export 10,000 tonnes to the European Union at a rate of 7.5 per cent per annum.
The red meat sector was not satisfied with this access. Sirma Karapeeva, chief executive of the Meat Industry Association, said she was “extremely disappointed” that the agreement did not include “commercially significant access for our exporters”.
Sam McIvor, CEO of Beef + Lamb, said the agreement was a missed opportunity to “give back better prices to both companies and farmers”, and said the EU had failed to live up to its rhetoric of free traders do not.
O’Connor said both sides have made concessions on agriculture that are “sensitive” to both economies.
“It’s probably fair to say no one likes it, so we’re probably right about it,” O’Connor said at a news conference.
He said both sides had to “compromise” because both have “the same passion and commitment to support their food producers.”
Both sides conceded it was agriculture that held talks, which began in 2018.
Ardern said the compromises were worth the deal, which she feels can not be left on the table.
“The calculation we have to make is if we walk away, we lose the opportunity completely. My calculation is that we would, and walking away from $ 1.8 billion is not something I was prepared to do for the New Zealand economy. , “Ardern said.
Kiwifruit, Fisheries and Pharmac the big winners
Big winners include the kiwifruit and seafood industry.
On day one of the agreement, kiwifruit, wine, onions, apples, manuka honey and manufactured goods will have tariff-free access to the European single market.
Since the 1970s, kiwi exporters have paid $ 8.80 per $ 100 of exports to the EU. This rate will be completely eliminated on day one of the transaction.
Bruce Cameron, chairman of Zespri, said the agreement would set up New Zealand to “expand our exports to Europe, to provide more European consumers with the highest quality Zespri kiwifruit and to help deliver strong yields to our producers.” “
Seafood currently has a 25 percent tariff, but it will also be eliminated by day, one that saves New Zealand exporters $ 25 per $ 100 of exports.
There were fears that the cost of medicines would increase under the agreement, with the European pharmaceutical industry supporting an extension of patent provisions that would push up the price of medicines, harming the national drug purchasing agency Pharmac.
New Zealand has managed to push back on that demand, leaving patent terms unchanged by the agreement, which could potentially save Pharmac hundreds of millions of dollars a year.
What the EU gets
The EU wins the removal of all New Zealand tariffs on day one of the agreement that enters into force. It is less of a victory than it sounds, as New Zealand’s tariffs are already low and exist mainly so that it can be offered as a concession in trade negotiations.
One new area of the FTA is the way it incorporates the Paris Agreement into trade.
If either side believes that the other one is failing to meet its Paris goals, it could take that accusation to arbitration and possibly impose penalties if the allegation is proven to be correct.
While there is a risk that any side may find themselves penalized on these rules, Ardern said it “sets the bar high” for other EU trade agreements with other countries, which set higher international standards that could benefit New Zealand producers .
The agreement was concluded so late that the full text will not be released for another week.
Do not expect the agreement to take effect any time soon. To apply in full, it will have to be ratified by all 27 EU member states. The EU concluded an FTA with Canada in 2014 and it has yet to be fully ratified, although many parts of it went into effect in 2017.
Ardern said the deal would bring greater benefits than the FTA concluded with the UK late last year. That deal included bigger wins, including the 100 percent tariff withdrawal, but the EU is a market of about 450 million high-income consumers, making the relative benefits much greater.
Ardern spoke to von der Leyen after her meeting, emphasizing New Zealand and the EU’s coordinated response to Russia’s aggression against Ukraine.
“While this is an incredibly important day for our trade relationship, it is also a time to acknowledge the extraordinary time and challenges facing Europe,” Ardern said.
“We stand shoulder-to-shoulder with the European Union in condemning Russia’s unprovoked and unjustified war of aggression against Ukraine,” she said, adding New Zealand’s “unwavering support” for Ukraine’s “independence” , sovereignty and territorial integrity within its internationally recognized borders. ” .
Some international commentators have driven the idea that Ukraine is giving up territory to appease Russia. Ardern’s statements in Brussels today indicate that New Zealand is very unlikely to support such a move.
New Zealand and the EU have also signed a policing agreement and agreed to greater co-operation between the New Zealand police and the European agency Europol.