News that formal negotiations can now begin for the European Union-New Zealand free trade agreement (EU-NZ FTA) has been welcomed by the red meat sector.
This follows a decision reached yesterday by the Foreign Affairs Council of the European Union (EU) on the negotiating mandate for FTAs with both New Zealand and Australia.
It opens the way for a free trade deal with one of the largest economies in the world that will boost jobs and income, says trade and export growth minister David Parker, who gave credit to Prime Minister Jacinda Ardern for her strong advocacy for New Zealand’s interests during her recent trip to Europe that he says helped tip the balance.
“It is also an endorsement of our strong backing for the talks as the next priority on our extensive free trade agenda, that includes the Comprehensive Progressive Trans-Pacific Partnership (CPTPP), the Pacific Alliance and RCEP,” he says.
The EU is New Zealand’s third largest trading partner, with two way trade worth more than $20 billion. Even excluding the UK, this country’s trade with the EU is worth about $16 billion annually and red meat is an important part of that, alongside dairy.
Welcoming the milestone but warning of trade barriers still in place
Beef + Lamb New Zealand (B+LNZ) and the Meat Industry Association (MIA) have both welcomed the news.
The agreement to start negotiations represents a significant milestone for the sector in the face of growing protectionist rhetoric worldwide, says B+LNZ chief executive Sam McIvor.
“The FTA will create a stable and level playing field which is crucial to the growth and future prosperity of the sheep and beef sector and New Zealand as a whole.
“Over 600,000 New Zealand jobs directly depend on international trade, with the red meat sector alone employing over 80,000 people in New Zealand. All these jobs depend on our ability to export competitively and in a stable and predictable trading environment.”
The EU is an important market for New Zealand red meat products, worth over $1.8 billion in the year ended December 2017. It is New Zealand’s largest market by region for sheepmeat exports and second-largest for wool and chilled beef exports. It takes this country’s highest quality and value cuts.
The sector still faces a range of significant tariff and non-tariff barriers into this market, says MIA chief executive Tim Ritchie.
“New Zealand pays approximately $53 million in tariffs per year on its red meat exports to the EU.
“A number of competitors, such as Canada, already have an FTA with the EU and New Zealand is only one of six World Trade Organisation Members without an EU FTA in place or under negotiation.
“New Zealand has long established relationships with the European red meat sector. Our red meat exports complement seasonal production in Europe so that customers can buy high-quality red meat all year around.”
Venison looks to ensure tariff classification is embedded
Farm-raised venison is currently imported into the EU in smaller quantities than beef or sheepmeat without tariffs or quota restrictions, notes Deer Industry NZ P2P manager Innes Moffat.
“We would look to our trade negotiators to ensure this tariff classification is embedded within any EU-NZ FTA to ensure continued free trade in New Zealand deer products,” he says.
“New Zealand and the European Commission have a long and constructive working relationship which allows mutual recognition of veterinary standards for food production, a system known as equivalence. We expect that this level of co-operation and recognition of different methods of obtaining similar outcomes will be reinforced through an FTA that will reduce compliance burdens on food producers in both economies.”
The venison sector looks forward to working with the New Zealand Government and European organisations to generate new opportunities for agricultural and food producers under an EU-NZ FTA, says Moffat.
EU-NZ FTA is building on other successful agreements for EU
European Commission president Jean-Claude Juncker says the agreements with Australia and New Zealand will build on the recent successful agreements with Canada, Japan, Singapore, Vietnam and Mexico amongst others, “expanding the alliance of partners committed to open and rules-based global trade.”
Noting the publication of draft negotiating mandates for both countries, he promised the agreements will be negotiated in the greatest transparency and that Member States are also expected to uphold the high level of transparency.
The announcement recognises Australia and New Zealand as important allies, says the European Commission, and the agreements will offer significant economic gains by getting rid of obstacles and boosting trade further.
“Having trade agreements with Australia and New Zealand would provide EU businesses with a valuable entry point into the wider Asia-Pacific region,” says the EC press release, adding it will put EU companies on an equal footing with those from the other countries in the area that have signed up to the Comprehensive Progressive Trans-Pacific Partnership (CPTPP) or that already enjoy better access to Australia and New Zealand through other preferential trade agreements.
European commissioner for trade Cecilia Malstrom will travel to Australia and New Zealand in June to formally open negotiations at the political level. The first negotiation rounds between the teams of negotiators are expected to take place in Brussels in July this year.
At the start of negotiations, New Zealand will release a package of information outlining its negotiating priorities for the agreement and how it will engage with New Zealanders as the negotiations progress, says David Parker.
“I look forward to welcoming Commissioner Malstrom to New Zealand next month. I share her view that we are already close in terms of our values and our open, global outlook. I also endorse her aspiration that we negotiate a win-win deal that opens new opportunities for our businesses and safeguards high standards in areas such as sustainable development.”