A clear First Past the Post result for the Conservatives in the UK means the way is relatively clear, or at least as clear as it can be, for the UK’s Brexit Withdrawal Agreement to be ratified within the British Parliament and for a trade agreement to be brokered with the European Union (EU). This will give more certainty to the way ahead for New Zealand’s meat exporters, but the pressure is on for good results.
But that’s not to say there won’t be plenty of speed bumps along the way.
The EU and UK had already agreed to a postponed Brexit date of 31 January 2020. Should the agreement be ratified through the British Parliament before Christmas, this should be achievable. The agreement will also need to be ratified through the European Parliament in January. Should all that go well, then work on the trade agreement can commence between the UK and EU can commence on 1 February.
However, there will be a lot of work to be done on withdrawal before the end of 2020 and the close of the agreed transition period and anything can happen from this point. The UK’s determination to meet that deadline has been signalled to the EU by the proposed inclusion of the date in a Bill that has been included in the Queen’s Speech setting out the government’s plans today, precluding any extension to the transition period. But, that brings a Hard Brexit and No Deal back into sight and has caused already overseas markets to tumble. It will take some time to carefully negotiate this complex agreement.
One of the major hurdles has been the Irish border and the latest Withdrawal Agreement draws this in the Irish Sea. New EU Ambassador-Designate to New Zealand Nina Obermaier, most recently lead negotiator for the UK on issues related to Ireland/Northern Ireland, is confident the best compromise has been reached.
However, while the Northern Ireland party DUP has lost two seats in Westminister, one of which was their parliamentary leader, their stronghold over the issue has eased, it is too early to say the issue has been safely put to bed.
Whatever occurs, when Brexit happens – at the earliest that will be towards the end of 2020 – the 50:50 split quota for New Zealand sheepmeat agreed between the UK and the EU will also come into force. New Zealand has already registered its strong dissatisfaction with this arrangement with the World Trade Organisation (WTO). However, the WTO currently has its trade appeal mechanism stalled because consensus cannot be reached on the Appellate Body.
Discussions are already underway in the EU-NZ Free Trade Agreement, which have been progressing well but will have slowed for delicate negotiation around agricultural goods arrangements.
Prime Minister Jacinda Ardern has indicated that the UK and New Zealand “share a commitment to launch negotiations towards a comprehensive and high-quality free trade deal once the UK leaves the EU.”
However, domestic UK and EU producers are also keeping a close eye on progress and will take every opportunity to put their cases to their own governments too.
Working alongside with the sector’s Brexit representative Jeff Grant and the ministries for foreign affairs and primary industries, though MIA and Beef + Lamb NZ have made no comment as yet, they will be closely examining the way ahead for the New Zealand red meat sector and watching for any potential non-tariff barriers. For the time being, with businesses in the UK being advised to continue with No Deal planning, it will be business as usual for New Zealand’s meat exporters to the region. In it’s latest Situation and Outlook for Primary Industries report, the Ministry for Primary Industries reiterated it will work closely with other government agencies to ensure, where possible, that trade disruption is minimised. The Ministry for Foreign Affairs has advice for businesses too.
With strong demand for New Zealand red meat and other proteins in Asia, probably continuing for 18 months or more, the pressure is off the valuable UK market for the time being, but our exporters won’t want to lose valuable customers.
The pressure is on for good results for New Zealand in 2020.