trade
New Zealand’s top trade dealmaker says the ratification of our trade deal by the European Union cannot be taken for granted, given loud complaints from some of the continent’s agricultural groups
Opinion: With all the confidence of a stubborn dog, Vangelis Vitalis, New Zealand’s chief trade negotiator, took the stage at the Primary Industries Summit in Auckland on Wednesday to stand up to farming critics of the just-concluded NZ-EU Free Trade Agreement.
The dairy and red meat sectors had complained when the deal was announced last Friday. Federated Farmers was particularly saddened, saying it was “a slap in the face for New Zealand farmers”.
The president, Andrew Hoggard, said Prime Minister Ardern would have been wiser to come home without a deal. It doesn’t matter, the pact will make 91 percent of our exports to the EU (a market of 450 million people) tariff-free after ratification and 97 percent seven years later.
Vitalis began with compassion. “I share your frustration.”
He said he was “furious” at the EU’s negotiating position. “The most protectionist bloc in the world… they acted like our 0.1 percent share of their market would destabilize it.”
But despite such intransigence, New Zealand had still achieved quota and tariff concessions for the dairy and meat sectors worth more than $600 million a year in additional export revenues once fully implemented. For the first time, they are also opening some dairy categories.
In addition, there was a lot of profit for other primary sectors, such as kiwis and horticulture. They are all currently dealing with competitors who have long had tariff-free access to the EU. Our seafood processors are in the worst condition and are currently facing 25 percent tariffs.
Once ratified, hopefully by the end of next year, the treaty will generate an estimated $1.8 billion a year in additional export revenue for New Zealand businesses.
It will also increase the share of all our exports covered by free trade agreements from 52% in 2017 to 75%. As Vitalis reminded the public, such trade safeguards are becoming increasingly important as trade policies and conditions become stricter.
The pact is also the first the EU has agreed with any country under its new framework for sustainable trade and development. As such, it goes well beyond reducing trade barriers to areas of mutual cooperation and better dispute settlement, for example over possible increases in EU agricultural subsidies.
The most important for our primary sector is a chapter on Sustainable Food Systems. Its text and the rest of the agreement will be published shortly. But the brief summary released so far says the chapter will create a platform for collaboration on “economic, environmental, social and cultural” issues in food systems; share expertise and conduct joint research; and collaborate in international forums.
“The European context wouldn’t get any better”,
– Vangelis Vitalis, New Zealand businessman
Considering the EUs From farm to plate strategy is a key feature of its climate and green growth strategies, this trade deal could open up highly beneficial areas of cooperation for our primary industry.
Our negotiators wisely avoided all issues that required ratification by all 27 parliaments of the EU Member States. Refusal by some of those countries means that Canada’s 2014 free trade agreement, while largely operational, will not be ratified; and the EU agreement with the Mercosur states (Argentina, Brazil, Paraguay and Uruguay) is still not ratified and not operational three years after the political negotiations have been concluded.
Instead, our deal only needs to be approved by the 705 MEPs elected from the 27 countries. Still, Vitalis said that is not obvious, given the loud complaints about the deal from some European agricultural lobby groups.
Reaching an agreement on our free trade agreement took two years of preparatory talks and four years of negotiations. Quitting the negotiations in hopes of convincing the EU to offer more on agriculture was unrealistic for many reasons, Vitalis said:
► We had little to offer the EU as our market is small and already open to trade. In contrast, we had some leverage in our recent negotiations for a free trade agreement with the UK. Given its departure from the EU, it is eager to join the comprehensive and progressive agreement for a trans-Pacific partnership and knows it needs New Zealand’s support to do so.
► We had rejected the EU’s main demand to extend the patent term on medicines and agrochemicals. Agreement would have limited the availability of generic versions and increased the cost of drugs for the government and chemical costs for farmers. New Zealand is the only champion in the OECD in terms of renewing patents on medicines.
► If we had stopped, we would have been at the back of the negotiating queue; and would have nothing new on the table.
► The “European context wouldn’t get any better”.
► And we have other trade talks that we must continue to pursue. While the US continues to refuse to talk about a free trade agreement with us, long stalled talks with the Pacific Alliance (Chile, Colombia, Mexico and Peru with a combined population of 220 million people) and with the Gulf Co-Operation Council (Saudi Arabia , UAE, Kuwait, Oman, Bahrain and Qatar) would bring many benefits to our economy.
At the end of his talk, Vitalis received only thanks and positive comments, and he left to stare down his counterparts in his next trade talks.
And he left a big job to the tireless, intelligent hunting dogs within the primary sector. Now more than ever they are needed for the urgent task of taking the primary sector crowds to sunnier and richer pastures.