Brexit’s past, present and fu­ture im­pact on NZ

Univer­sity of Can­ter­bury lec­turer Dr Ser­ena Kelly of the Na­tional Centre for Re­search on Europe looks at what Brexit means for NZ.

The Press - - Business -

On March 28, Bri­tish Prime Min­is­ter Theresa May sent a his­tor­i­cal let­ter to Brussels in­di­cat­ing her coun­try’s de­sire to leave the Euro­pean Union (EU), trig­ger­ing Ar­ti­cle 50 of the Lis­bon Treaty.

In the not-too-dis­tant past, this move would have elicited joy and re­lief among New Zealan­ders, who strug­gled eco­nom­i­cally in the years af­ter Bri­tish suc­ces­sion to the Euro­pean Eco­nomic Com­mu­nity (EEC) in the 1970s. Yet New Zealand elites backed Great Bri­tain and North­ern Ire­land re­main­ing in the EU, recog­nis­ing the EU’s im­por­tance as a geopo­lit­i­cal and eco­nomic sta­biliser in world af­fairs.

New Zealand’s pro-re­main at­ti­tude to­wards the loom­ing prospect of Brexit re­flects a ma­tur­ing re­la­tion­ship with the United King­dom and the Euro­pean Union. So what does Brexit mean for New Zealand and how has New Zealand re­acted to de­vel­op­ments?

In 1973, New Zealand’s econ­omy, se­cu­rity and iden­tity was closely linked to, and aligned with, ‘‘Mother Bri­tain’’. Yet, our lead­ers at the time ac­cepted the Bri­tish de­ci­sion to throw off her stale colo­nial ties. In the face of the EEC ac­ces­sion New Zealand ne­go­tia­tors took a prac­ti­cal, proac­tive, cal­cu­lated and diplo­matic ap­proach to the sit­u­a­tion, en­sur­ing that we gained the best trade deal with the EEC out of all of the for­mer Bri­tish colonies.

The shock out­come of the Bri­tish ref­er­en­dum in June 2016 took New Zealand by sur­prise. It hap­pened at an all-time high for NZ-EU re­la­tions – we were fi­nal­is­ing the PARC agree­ment (EU-NZ Com­pre­hen­sive Frame­work Agree­ment) which le­galises the re­la­tion­ship, and the in­ten­tion to be­gin FTA ne­go­ti­a­tions had been an­nounced.

Trade is the most vi­tal in­ter­est for New Zealand’s for­eign pol­icy. Of­fi­cial sta­tis­tics show that for the year end­ing June 2016, the EU was New Zealand’s third-largest trad­ing part­ner (and ris­ing), and the UK our fifth-largest ex­port mar­ket. Out of our to­tal trade with the EU, UK trade makes up 20 per cent.

The EU’s im­por­tance to New Zealand was show­cased a few weeks ago when Prime Min­is­ter Bill English made his first of­fi­cial trip to Europe. In what was pos­si­bly a first for his Na­tional Party, English vis­ited Brussels be­fore the UK. Dur­ing his Brussels visit, the pos­si­bil­ity of fast­track­ing the EU-NZ FTA was pro­moted on both sides – in order to sig­nal to the world the im­por­tance of trade lib­er­al­i­sa­tion in the face of a global trend to­wards so-called pop­ulism. In­deed, Trade Min­is­ter Todd McLay has in­di­cated that the EUNZ FTA is likely to be fi­nalised be­fore an UK-NZ FTA. This is un­der­stand­able – Bri­tain still has at least two years to ne­go­ti­ate its exit from the EU and has yet to be ac­cepted as a mem­ber in the World Trade Or­gan­i­sa­tion.

In the 1970s, New Zealand had ex­pert diplo­matic ne­go­tia­tors. It is vi­tal and rea­son­able to ex­pect that New Zealand trade ne­go­tia­tors will ex­pertly ne­go­ti­ate a good out­come with both the EU and UK. It is im­por­tant not to choose sides. Yet sub­stan­tial re­sources, in­clud­ing staff, will be needed at a time when our lim­ited for­eign pol­icy re­sources have been di­rected away from Europe to­wards Asia. As then prime min­is­ter John Key stated, ‘‘it’s go­ing to dou­ble the ef­fort we have to make’’.

When con­sid­er­ing the pos­si­ble im­pact of Brexit on trade, sheep meat is par­tic­u­larly im­por­tant, with the EU our big­gest des­ti­na­tion. Re­mark­ably, given that ap­prox­i­mately 40 per cent of the to­tal EU bud­get goes on the Com­mon Agri­cul­tural Pol­icy, the de­bate about the fu­ture of agri­cul­tural sub­si­dies in the UK has been re­mark­ably low key. Prime Min­is­ter May has promised Bri­tish farm­ers will con­tinue re­ceiv­ing the same sup­port un­til the end of the ne­go­ti­a­tions with the EU but noth­ing fur­ther. It is fair to as­sume that Bri­tish sub­si­dies will be less than be­fore.

Given that UK farm­ers are also sheep meat pro­duc­ers and ex­porters to the EU, this could af­fect our trad­ing re­la­tions with the EU – Bri­tish farm­ers fac­ing sub­sidy cuts will likely be wary of the prospect of New Zealand ex­port­ing more agri­cul­tural prod­ucts to them un­der a new free trade agree­ment. How­ever, there may be more need for this prod­uct on the con­ti­nent if the Bri­tish no longer push ex­ports to­wards Europe.

Im­me­di­ately af­ter the ref­er­en­dum, there was hope that New Zealan­ders would ben­e­fit from re­laxed im­mi­gra­tion laws di­rected at New Zealan­ders. Un­sur­pris­ingly – given the con­sen­sus that Brexit was a vote against un­fet­tered im­mi­gra­tion – Prime Min­is­ter May re­cently told Prime Min­is­ter English that there would be no change.

Theresa May’s let­ter last month means there is suddenly a prob­a­ble timetable for Brexit– around 18 months. May’s let­ter only hints at the phe­nom­e­nal amount of time and man­power re­quired to ex­tract the UK from the EU and to come to an agree­ment about the fu­ture re­la­tion­ship be­tween the EU and UK. This means very lim­ited re­sources for re­la­tion­ships with third coun­tries such as New Zealand.

What about New Zealand’s me­dia por­trayal of Brexit? The New Zealand me­dia has por­trayed Brexit as in­ter­est­ing to watch but some­thing that is hap­pen­ing far away with lit­tle per­ceived di­rect im­pact on our shores. It came as a sur­prise, given the heavy re­liance of New Zealand me­dia on Bri­tish sources, as well as lin­ger­ing feel­ings of aban­don­ment from Bri­tish EEC ac­ces­sion, that the New Zealand me­dia and elites con­veyed the feel­ing it would be bet­ter for ev­ery­one if Bri­tain stayed in the EU.

His­tory has shown that we can be very suc­cess­ful at man­ag­ing im­por­tant trade ne­go­ti­a­tions, but we will need to make sure our voice is heard dur­ing and im­me­di­ately af­ter the ne­go­ti­a­tions. ●➤ Dr Ser­ena Kelly teaches and re­searches the pol­i­tics and ex­ter­nal re­la­tions of the Euro­pean Union and is lead­ing a post-Brexit per­cep­tions project.

PHOTO: REUTERS

A woman holds a Pro-Brexit bal­loon in a Lon­don pub at an event to cel­e­brate the in­vok­ing of Ar­ti­cle 50 af­ter Bri­tain’s Prime Min­is­ter Theresa May trig­gered the process by which the United King­dom will leave the Euro­pean Union.

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