UK starts consultation in readiness for UK-NZ FTA

Dr Liam Fox, UK Secretary of State for International Trade
Dr Liam Fox, UK Secretary of State for International Trade

Domestic consultation has started in the UK for the UK-NZ FTA and also for the UK’s entry into the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). As a cornerstone market for New Zealand’s red meat exports, the news is welcome.

UK Secretary of State for International Trade Dr Liam Fox made the announcement in London yesterday morning. The consultations will run alongside ones for free trade agreements (FTAs) with the US and Australia too.

“These are our crucial and strategic and economic relationships that must continue on a sound footing after Brexit,” he said.

“However, we must go further. The Govt is determined not only to seek deals with key bilateral partners but to break new ground, putting the UK at the heart of the world’s fastest growing regions. That is why I’m also announcing a fourth consultation on potentially seeking accession to CPTPP. This covers markets across the world from Canada to Chile, Mexico to Vietnam, it reduces 95 percent of tariffs along with other barriers to trade.

“For the first time in over 40 years we’ll be able to determine who we trade with and on what terms,” said Fox.

The aim is to engage in a trade policy that benefits the whole of the UK and ensure that it meets its commitments to an inclusive and transparent trade policy as well as working with the Devolved Administrations of Wales, Scotland and Northern Ireland on an ongoing basis to deliver an approach that works for the whole of the UK, he explained.

The UK is currently New Zealand’s fifth largest trading partner with two-way trade worth nearly $6 billion annually and is the third largest market overall for New Zealand’s red meat exports.

News welcomed by Beef + Lamb NZ

“The UK is a cornerstone market for us and this is a huge opportunity for our sector,” says Beef + Lamb NZ (B+LNZ Ltd)’s manager of international trade Esther Guy-Meakin. “The FTA will enhance opportunities for us by reducing tariffs and barriers to trade.”

Jeff Grant
The New Zealand red meat sector’s new Brexit representative Jeff Grant.

The UK is a major market for New Zealand’s sheepmeat and co-product exports, worth $447 million in the year to end March 2018 and accounting for 68 percent of exports to the EU. Meat Industry Association analysis shows it was ranked second in the top export sheepmeat markets, accounting for 13 percent of total export value – four percent more than the previous year, thanks to strong prices.  The monthly FOB value/kg had risen back to just under $10/kg at the end of March. It was also New Zealand’s top chilled sheepmeat market worth nearly $241 million to meat exporters in the year ending March 2018.

“Chilled sheepmeat is a real priority for us and we are working through the Brexit-related challenges on that,” says Guy-Meakin.

Co-products is another key red meat export to the UK. The market was number 10 in the export rankings for the product in the year ending March 2018, earning $37.2 million and accounting for two percent of total exports globally. This had dropped by five percent on the year earlier.

The sector recognises that working on closer relations with trade representatives is key. In early April, a 20 strong British meat industry delegation visited New Zealand to get a closer look at how the New Zealand red meat sector operates and former AgResearch and OSPRI chair Jeff Grant will shortly leave for the UK to take up a new role as the sector’s Brexit representative, based in the market.

Parker welcomes the move

David Parker
David Parker, Minister for Trade.

Trade and Export Growth Minister David Parker has welcomed the start of the consultations in the UK.

“This is a strong signal that the UK is prioritising an early agreement with New Zealand,” he says. “It reflects our shared commitment to put in place a high quality, comprehensive FTA as soon as possible once the UK has left the EU. There’s lots of other countries they could have chosen and they have chosen us and that’s good.”

Parker said businesses and workers can be sure the New Zealand coalition government will support them to achieve greater market access for our exports and to expand opportunities for all.

In addition, the UK joining the CPTPP is to be welcomed as it would: “both increase its value and contribute to further alignment of rules and trading standards, which is important in the current global trade environment,” he says.

Timeline

Actual UK-NZ FTA negotiations will be unable to get underway until the UK has finally exited the European Union (EU), which is expected to happen next March, if all goes well. Assuming it does, this would be followed by a transition period.

In the meantime, EU-NZ FTA negotiations started in Brussels yesterday. New Zealand’s ambassador to the EU, David Taylor, says the aim is for “swift conclusion of a high quality, progressive and comprehensive agreement that will benefit both sides.”

As part of that, New Zealand’s negotiators will be grappling with the proposed simple split of the World Trade Organisation (WTO)’s European Union quota for New Zealand sheepmeat and beef. This is currently set at 228,254 carcase weight equivalent tonnes at zero percent levy for sheepmeat and just 1,300 tonnes of high quality beef, spread over the 28 – soon to be 27 – member nations.

“Our sector has strongly rejected that proposal,” says Guy-Meakin. “It simply does not work for us and we have been very firm in our rejection to both the UK and EU. The key will be ensuring stability and predictability in the market and continuity of trade.”

 

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