Trade really does matter for the export red meat sector

Trade really does matter for the export red meat sector in the current uncertain trading environment, as a number of presentations at the recent Red Meat Sector Conference showed.

Over $8.5 million of beef, sheepmeat and venison is exported around the globe each year to more than 120 countries. Keeping markets open is of vital importance to both red meat producers and processors.

MFAT’s Clare Kelly talked through the coming trade challenges around the world for New Zealand red meat. MFAT has its work cut out with several free trade agreement (FTA) negotiations underway, keenly watched by the red meat sector. These include TPP-11, the Pacific Alliance, a new trade deal with the UK and the EU-NZ FTA. Keeping a close eye on any ramifications from the latter two on New Zealand’s tariff-rate quotas with the EU under the WTO will also be important for the MFAT team.

Clare Kelly, the Ministry for Foreign Affairs & Trade (MFAT)’s divisional manager for trade negotiations, and former New Zealand ambassador to Mexico, said during the Trade Matters session that, rather than a disrupted trade environment, she prefers to talk about the “uncertain” trading environment for New Zealand products. She noted New Zealand’s core challenges of scale, distance from markets and large exposure to trade are still in place.

“But there are new ones too,” she said, listing the global rise in protectionism, new barriers to trade, the withdrawal of “key players” from their traditional space as free-trade champions, along with new opportunities.

“All this churn is creating new opportunities for New Zealand, which is well placed to meet those challenges as trading partners look for new partners in the changing world,” Kelly believes.

MFAT has its work cut out with negotiation for several free trade agreement (FTAs) already underway: among them are TPP, RCEP, India, the Gulf Co-operation Council and upgrades to agreements with Singapore, China, AANZFTA and PACER+. Next on the list is development of agreements with the ‘dynamic’ Pacific Alliance, the EU-NZ free trade agreement (FTA) and a new trade deal with the UK, following its withdrawal from the European Union.

The refreshed Trade Agenda 2030 includes a new non-tariff barrier (NTBs) clearing house helping MFAT work closer with export businesses, maintaining vigilance and and keeping ahead of the game. It also includes MFAT gaining a better understanding of services and the technical trade and working with New Zealand Trade and Enterprise to turn ‘market access into market success’, she outlined.

TPP-11 still important for New Zealand

TPP remains a very important part of New Zealand achieving its Trade Agenda 2030 goal of having 90 percent of markets covered by free trade agreements (FTAs) by 2030, according to Kelly.

After the withdrawal of the US from the important agreement. hope is that a deal with the remaining 11 TPP countries will be agreed by the end of the year.

“The preference is to have the US in the agreement, but we are seeking to have agreement of TPP-11 by the end of the year,” said Kelly.

However, NZ special agricultural trade envoy, Mike Petersen, questioned whether Canada and Mexico will be in a position to be part of the deal, before they have negotiated the North American Free Trade Agreement (NAFTA) with the US.

The trade negotiations have gained an added dimension, a domestic audience, as a result of opposition to the Trans-Pacific Partnership (TPP), of which all of the New Zealand political parties are aware. Key to this for all trade deals will be transparency, speakers acknowledged.

Step change for Latin America with Pacific Alliance

The Pacific Alliance, a $US 3.75 billion trade bloc “bigger than Brazil” and involving Mexico, Chile and Peru creating a market bigger than Brazil formed two to three years ago and aims for the elimination of tariffs between the countries over the next 14 years. It is one of the most dynamic new FTAs and, according to Kelly, New Zealand is currently being considered as of of four new associate members.

“It creates a step change for New Zealand’s relationship with Latin America,” she said.

Hard road to the UK

Sir Lockwood Smith ONZM, former NZ High Commissioner to the UK, Speaker of the House, Minister for Agriculture and MP.

Dialogue has started on a new deal with the UK and New Zealand was assured it is at, or near, the top of the queue, by British Foreign Secretary Boris Johnson during his recent visit, said Petersen.

The UK’s withdrawal from the EU – Brexit – remains complicated and of concern. It involves negotiation of two new bilateral agreements for New Zealand: one with the EU-27 and the other with the UK.

The bilateral negotiation with UK cannot start until the Brexit process has been completed – theoretically by the end of next year, said Kelly.

“It will take some time,” said Petersen, noting there will also be a transition period after Britain’s own agreement with the EU is signed.

The UK is looking very keenly at New Zealand’s mid-1980s experience after the removal of agricultural subsidies. Former New Zealand ambassador to the World Trade Organisation (WTO), Crawford Falconer, has been appointed as advisor to the British government during the Brexit talks.

“The opportunities are huge, but the risks are very, very real too. It’s finely balanced at the moment,” the newly returned former New Zealand High Commissioner to the UK, Sir Lockwood Smith said.

He saw Michael Gove’s appointment as the Secretary of State for Department of the Environment and Rural Affairs as a positive thing, but the strength of the Northern Ireland Democratic Unionist Party (DUP)’s influence in the British Parliament as a negative, with Irish farmers’ traditional opposition to imports. He had also noted some troubling rumblings from key figures such as Britain’s Secretary of State for international trade Liam Fox and also Mark Price the minister for international trade saying they will be looking at the amount of New Zealand lamb being imported into the UK.

Protecting the flexibility afforded by New Zealand’s WTO-bound 228,000 tonne (cwe) tariff-rate quota (TRQ) for sheepmeat for the EU will be important, he said. A very close eye is also being kept on any ramifications for New Zealand’s beef TRQs for the EU. The WTO remains an extremely important mechanism for New Zealand’s global trade as it disciplines the use of agricultural subsidies and offers opportunities to an appeals process if there are disputes about fair and free access to trade.

Smith noted a focus is needed to be kept on Ireland to make sure that, “whatever is worked out for Ireland in the Brexit process, does not impinge on us.”

For that reason, New Zealand is opening a presence in Dublin in 2019, which has traditionally been handled by the High Commission in London.

“We have moved quite far along the path to the EU-NZ FTA and scoping discussions have already been completed,” Kelly said. It seems likely that negotiations could commence at the end of this year, or early next year. “How long it will take thereafter, is anyone’s guess,” she said.

She assured delegates MFAT is doing everything it can towards quick outcomes.

Referring to the EU-Canada FTA and the recently signed EU-Japan FTA, Petersen said it’s a case of: “Keep calm and carry on, and keep showing up in the markets.”

 

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