EU deal won’t be as big as China

Trade Minister David Parker says a potential trade deal with the European Union is not likely to be as lucrative as the trade agreement with China.

He hopes to have it finalised within two years.

The European Union (EU) agreed to begin negotiations with New Zealand and Australia late on Tuesday night, NZ time.

A deal with the EU, one of the largest markets in the world, is considered one of the holy grails for New Zealand, potentially worth billions of dollars.

Two-way trade is already at about $20 billion a year.

But Parker said that while the deal would be worth a lot of money it was unlikely to bring in more than the Free Trade Agreement with China, signed in 2008 by the fifth Labour Government.

‘‘I would be surprised if it is quite as successful as the Chinese free trade agreement,’’ Parker said. ‘‘But I don’t want to diminish how important that is – I mean, China rose from a relatively small market to the largest in the world now.

‘‘We’ve been able to hitch ourselves to their wagon. We’ve had the benefit of their growth as well as improved access.

‘‘Europe is not growing in the same way – but they are already a high-income [area].’’

It would likely be worth a $1b to $2b boost to New Zealand’s economy every year.

He expected to wrap up the deal quite quickly.

‘‘I never want to count our chickens before they hatch ... there is plenty of precedence for both New Zealand and Europe in respect to earlier trade agreements. I’d be hopeful we can wrap it up in a couple of years.’’

Parker said any European fears about a flood of cheap dairy from New Zealand would be misplaced.

‘‘We’re already maxed out as to the number of cows in New Zealand. We’re not producing great increases in volumes.’’

Europe’s wealthy consumers would be more likely to look for higher-value high-quality goods from New Zealand, with the country’s clean green branding a key part of that.

The first round of talks is set down for July in Brussels and EU Trade Commissioner Cecilia Malmstro¨m will come to New Zealand in June for the formal launch of negotiations.

Parker himself is travelling to the EU next week, stopping in Brussels and Germany.

‘‘We’re pushing this at all angles,’’ he said.

Malmstro¨m said on Tuesday (Wednesday NZ time) that New Zealand and Australia ‘‘are important friends and allies. They are part of this circle of friends who believe in good trade and in multilateralism.

Prime Minister Jacinda Ardern said the news was ‘‘hugely exciting for us’’.

‘‘We have a plan around building the prosperity of New Zealand’s economy by reaching out and engaging in these progressive trade agreements,’’ Ardern said.