NZ’s beef with EU-UK tariff quotas
Sam McIvor and Sirma Karapeeva
The Covid-19 pandemic has hit the global economy hard, and trade will be critical to getting economies back on to a healthy trajectory.
Trade has always been an engine for growth, supporting communities and living standards. New Zealand’s red meat processing and export sector provides jobs for 92,000 Kiwis and plays a big role in regional prosperity, and in our rapidly developing Ma¯ori economy.
It is therefore beyond belief that the European Union (EU) and United Kingdom (UK) remain committed to splitting up tariff quota access for beef and sheep meat into their markets, leaving New Zealand worse off. This is an issue with real-world implications for our exports and cannot be allowed to happen.
Those markets were together worth around $1.5 billion last year for New Zealand red meat and coproducts.
The proposed split is due to take effect in five weeks. New Zealand has constantly raised concerns about this for close to four years. And yet the issue remains unresolved. There is an urgent need for the UK and EU to sit down with New Zealand and agree on a fair and practical solution to ensure we are not worse off.
If you’ve been following the Brexit process, you will know that the EU and UK have struggled to find common ground in their ‘‘divorce proceedings’’ – but one thing that they have been able to agree on is dividing up the quotas once the UK leaves. Those quotas were part of the balanced package of negotiated outcomes agreed by the EU (including, of course, the UK), New Zealand and others at the World Trade Organisation in 1995.
These quotas provide awindow through the otherwise prohibitively high tariff wall that surrounds Europe. In some cases, the window is only open a crack. For our highquality beef, amere 1300 tonnes is allowed in under lower tariffs.
For sheep meat, the window is further open, enabling us to complement British and European production to help keep lamb on the table year-round.
Splitting the tariff quotas would have significant negative commercial impacts.
For beef, the split-up quantities would be so small they would threaten the very viability of the trade. The beef quota into the UK would be around 450 tonnes a year, which is what one New Zealand company could produce in amatter of weeks. That quantity would then be divided up further among New Zealand exporters.
Nor does the split make sense for British consumers, who will undoubtedly end up paying more for beef given that the UK does not produce enough and has to import around one-quarter of its total consumption.
Sheep meat has a bigger starting point in terms of volumes, but the split takes away one of the key components of the bargain struck 25 years ago in the WTO: The flexibility to respond to the market depending on prices, customer preferences or business strategy.
What makes the current situation all the more perplexing from the point of view of New Zealand farmers and meat companies is that New Zealand’s values – our exemplary food safety standards, our focus on animal welfare and our core concerns of good environmental stewardship – match or exceed those of the UK and EU.
Beyond shared values, this country is a trusted and responsible long-term trader.
New Zealand has put its best foot forward to come up with creative solutions to address the trade impacts. We are now looking to the UK and EU officials to sit down and work constructively, seriously and above all urgently. Not only is this doable but it is the minimum obligation that the EU and UK governments have, especially as they claim to be leaders in values-based global trade.