Government warns of a Brexit trade war
The New Zealand Government is warning the United Kingdom and the European Union (EU) not to risk a trade war over post-Brexit proposals.
As part of their Brexit ‘‘divorce talks’’ the British Government and European Commission want to divide up tariff rate quotas on agricultural products.
But exporters argue that would have significant impact on New Zealand’s access for meat, butter and cheeses into Europe.
A strongly worded submission to the European Commission from the New Zealand Government, has now attracted attention in London because it suggests a ‘‘spiral’’ into a trade war.
‘‘It is difficult to understand why the EU – a long-standing champion of the rules-based multilateral trading system – would want to risk precipitating a potential spiral into unilateral withdrawal of commitments and potential retaliation in this way, as well as the reputational damage this could entail,’’ the submission notes.
In a tweet, respected Sky News political editor Faisal Islam and self-described ‘‘Brexitologist’’ said the objections were ‘‘pretty strong’’ and posted a link to a joint submission by Beef + Lamb NZ and the Meat Industry Association.
Both sides notified the World Trade Organisation of the plan last week. Tariff rate quotas allow for a fixed quantity of farm products to enter the European Union at a lower, or no, tariff rate. Under the deal, once the UK leaves the customs union in 2020, London and the remaining 27 member states would simply divide up the current volumes.
New Zealand – and Argentina, Brazil, Canada, Thailand, the United States and Uruguay – all object to the proposal. That’s because simply splitting the trade quotas would mean exporters wouldn’t be able to move their goods freely across the English channel once they’ve landed in Europe.
In a submission to the European Commission, Beef + Lamb said it was ‘‘unacceptable’’.
‘‘Apportioning the quota volumes between the UK and EU significantly diminishes the value of the quotas under the current EU World Trade Organisation (WTO) schedule. The approach proposed by the EU does not preserve the flexibility to trade into the EU and UK markets according to changes in consumer demand and domestic production,’’ the organisations wrote.
Trade Minister David Parker told Stuff that New Zealand’s diplomats had been sending the same strong message, behind the scenes, since early last year.
‘‘I don’t think this will come as any surprise to them,’’ he said. ‘‘We don’t think we should be prejudiced by the UK withdrawal from the European Union.’’
New Zealand wasn’t threatening retaliatory measures, he stressed.
‘‘We are fighting the corner but we are not proposing escalating this into a trade war, with tit-for-tat tariffs. We are just observing the EU has been noting its own concerns about a WTO rules-based order being maintained. We are saying this is a case in point where it ought to be.
‘‘The multi-lateral system is under strain at the moment ... we don’t think the way in which this is being done, and the proposal are reinforcing the rules based system, there is an argument they are undermining it.’’
Parker said his Government could complain to the WTO, if the EU proceeded. ‘‘I hope we don’t reach that point.’’