NZ’s hard sell and gains in US, Europe
It would be an understatement to say Europe has a lot on its plate right now. Suffering the enduring fallout from Covid-19 and with healthcare stretched beyond breaking in many nations, supply chain disruptions, dissent over mandated vaccinations, and voter dissatisfaction, the region is also in the grips of war after the Russian invasion of Ukraine.
An energy crisis is also brewing. Britain is formulating a contingency plan to cut off supplies to the Netherlands and Belgium if UK supplies run short.
Into this environment of unrest stepped New Zealand Prime Minister Jacinda Ardern this week, with some words of warning from our corner of the globe.
It is to her credit she received what appears to have been a warm reception. Word of more potential problems from a far post is not exactly what the North Atlantic Treaty Organisation (Nato) would be hoping to hear.
The world needs right now a clear signal that democracies — like ours — deliver for people. This is why the EU is working to strengthen its partnerships with like-minded partners.
“Sadly, the shift in environment we are currently seeing is not limited to one region,” she told Nato leaders. “In our neighbourhood, we see the mounting pressure on the international rules-based order. We see attempts to disrupt and destabilise — even New Zealand is targeted by Russian mis- and disinformation.
“Separately, China has in recent times also become more assertive and more willing to challenge international rules and norms.”
As some acknowledgment, the Nato summit included a commitment to strengthen ties with partners in the Indo-Pacific to tackle cross-regional challenges and shared security interests. China subsequently issued a statement, calling Ardern’s comments unhelpful, regrettable and wrong.
On trade, the ledger shifted more to New Zealand’s liking. The press release from Brussels headed “New Zealand secures major free trade deal with European Union” would have put a spring in the step of a few primary producers early yesterday.
The bullet points were also invigorating: Export revenue to the EU to grow by up to $1.8 billion annually on full implementation; duty-free access on 97 per cent of New Zealand’s current exports to the EU, with more than 91 per cent removed the day the FTA comes into force; NZ exporters set to save about $110 million per annum on tariff elimination, with $100m slashed from day one; and immediate tariff elimination for all kiwifruit, wine, onions, apples, ma¯nuka honey and manufactured goods, as well as almost all fish and seafood, and other horticulture products.
However, the news is tempered by the quota and tariff restrictions that remain on our largest exports. Inquota tariffs remain of around NZ$630 per tonne for butter and NZ$435 per tonne for milk powder.
Federated Farmers called the deal “miserly” for meat and dairy. The beef quota for New Zealand is 10,000 tonnes, just 0.1 per cent of the 6.5 million tonnes of beef Europeans consume each year. The EU has a cheese market of 9.5 million tonnes. After seven years, New Zealand exporters will have access to just 0.14 per cent of this market.
Another unheralded outcome is climate action being included in an FTA for the first time, making New Zealand’s commitments under the Paris Agreement subject to binding dispute settlement.
The free trade deal is great news for subsidiary exporters, and more successful than May’s mission to the US, where the strongest line on trade was in the ensuing “United States — Aotearoa New Zealand Joint Statement”, noting a resumption of Trade and Investment Framework Agreement (TIFA) discussions, an agreement in place since 1992.
For the effusive welcome afforded Ardern in Madrid, New Zealand remains balanced by siding on security issues with the US and Europe while heavily reliant on our exports to China worth $20.1b, comprising $16.7b in goods and $3.4b in services.
On the ongoing tensions with Russia and the threat of nuclear war, Ardern told the Nato leaders: “New Zealand is a Pacific nation. Our region bears the scars of decades of nuclear testing. It was because of these lessons that New Zealand has long declared itself proudly nuclear-free. Some may observe this status and assume us to have the naive privilege of such a position. I would argue, the world can’t afford anything less.”
The question remains, can we afford to continue with the status quo on what Europe and the US offer?
The gains made by the trade agreement announced this week are real and welcome but our position could be greatly improved with a lot more of our meat and dairy on Europe’s plates.