Is a free trade agreement with the EU a big deal? The simple answer is yes.
It is worth about $20 billion in two-way trade.
The EU is our biggest source of imports, and is our third-largest export market.
We send them our meat, wine and fruit, while they mostly send us pharmaceutical products, machinery, cars and alcoholic beverages.
But they’ve had an easier time sending goods to New Zealand than we have had in sending ours to the EU.
The bloc is known for vigorously protecting the interests of its farmers by instilling tariffs and quotas.
It took around 10 years for them to even agree to start negotiations with us once we indicated interest in forming some kind of free trade deal.
Did you know half our onions are sent to the EU (that’s around 90,000 tonnes), but our exporters pay a 9.6% tariff, which makes it harder to compete with other countries who have free trade deals with the EU and don’t pay any tariffs at all.
Then spare a thought for our fish exporters. Tuna exporters pay a 22% tariff!
Tonight she’ll be meeting two of the world’s most powerful men.
The idea of a free trade deal is to better this situation. But the likelihood of zero tariffs on some of our agricultural products might be a big ask.
I asked the European Commissioner for Agriculture, Phil Hogan, directly about whether those tariffs are likely to be reduced or removed – he didn’t answer.
But he said the European Council (which gives the commission permission to start free trade negotiations) has said, “You can go and negotiate with New Zealand but you have to respect some sensitivities, particularly in some products in agriculture like dairy, beef and sheep,” and that “in the case of not having full liberalisation on any products, we work out a quota, a tariff rate quota”.
Given that diary, beef and lamb are such huge industries for New Zealand, that sounds ominous.
But New Zealand is world renowned for its high-quality trade deals – don’t forget we were the first to negotiate a free trade deal with China - so can our negotiators pull off another trading coup?
Let’s be honest, New Zealand is a small country with a limit of how much produce we can provide.
Surely, the argument will be that we have free trade deals with a number of other countries who also want our agricultural products, so can the EU really expect that a country of nearly 5 million people would pose a serious threat to a market of half a billion people?
The Commissioner for agriculture is coming to visit NZ next month, which is a sign of just how sensitive that issue is. But the EU is determined to try to wrap up the process by the end of the year. That’s at an unprecedented speed.
And given China’s slowing economy, New Zealand must diversify its markets. A free trade deal with the EU does that.
If these agricultural issues can be resolved at speed, it may come at a good time.
SHARE ME