UK International Trade Secretary, Liz truss, with Trade Minister David parker in Wellington in September.

New Zealand diplomats have told the World Trade Organisation  (WTO) in Geneva they fear Brexit could see New Zealand shut out of the British market for some key agricultural exports.

Australia shares the same concerns, and there are reports that it is going to seek compensation from the British Government for market loss.

New Zealand wants specific quotas for non-European countries to access the market.

At a meeting of the WTO’s Goods Council last Thursday, 15 countries – including  New Zealand, the US, India, Australia and Canada – raised concern over the so-called Tariff Rate Quotas (TRQs) that will be in place after Brexit. 

Under WTO rules, nations use TRQs to set a threshold at which foreign goods can be imported at reduced tariff rates.  

Currently, there is one quota for the whole of the E.U., but that will now be split between the 27 countries remaining in the E.U. and Britain.

While only 45 per cent of New Zealand’s meat exports to Europe go to Britain, New Zealand exporters have argued that they want the flexibility to increase or decrease exports to countries according to where prices are best.

They are making this argument against persistent lobbying from the British Sheepfarmers’ Association to have the U.K. Government impose tougher limits on sheepmeat imports because the British farmers will face higher tariffs exporting to Europe and thus would prefer to sell their meat in Britain where New Zealand would be a competitor.

It is that EU-UK trade that complicates the issue.

Non-European nations have warned that their producers could lose access to both the British and E.U. markets.

They fear that E.U. quotas will be soaked up British imports, while British quotas will be filled by imports from the E.U.

“We will be quickly crowded out and face a loss of access to both markets,” the U.S. said in a statement delivered to the WTO meeting.

At the WTO Council for Trade in Goods meeting on Thursday in Geneva, according to the authoritative “Inside U.S. Trade” newsletter, the U.S. said the way the E.U. and U.K. were proposing to apportion the tariff-rate quotas, would not equitably divide access to the two members’ markets, but would instead decrease it.

 “Furthermore, the proposed approach fails to address how bilateral EU-UK will be treated once the U.K. is no longer part of the European Union.

“Currently that trade is not subject to the TRQs.

“But what happens once Brexit concludes?” the U.S. said, according to a copy of its remarks obtained by Inside U.S. Trade.

“If the U.K. and EU-27 are subject to the same TRQs the rest of us face, then we will be quickly crowded out and face a loss of access to both markets.”

The U.S. was joined in its criticism by Australia, New Zealand, Canada, China, Mexico, South Korea and others.

Australia argued that the E.U. and U.K. should provide “compensatory concessions” to those non-EU WTO members that would be affected by market access loss.

 “Australia cannot, however, accept the assertion by both the E.U. and U.K. that no compensation is required as there has been no loss in value of the concessions,” the country said, according to a copy of its remarks.

 “It is clear the proposed modifications to TRQs will lead to significant economic loss.”

The members argued that simply apportioning the TRQs between the E.U. and U.K. was not sufficient. 

“It is hard to see in these circumstances how other WTO members would have much realistic chance of accessing these quotas unless they are explicitly preserved for other WTO members to maintain our existing levels of access, or substantially expanded to account for the large bilateral EU-UK trade in these products,” New Zealand said.

New Zealand also called on London and Brussels to create quotas “explicitly preserved for other WTO members to maintain our existing levels of access, or substantially expanded (quotas) to account for the large bilateral EU-UK trade.” 

Australia said its businesses with licenses to export agricultural products to the E.U. under the existing quotas system had already suffered “significant commercial disruptions” because of the uncertainty surrounding the system after Brexit.

The U.S. was joined in its criticism by Australia, New Zealand, Canada, China, Mexico, South Korea and others.

Trade Minister David Parker was not commenting on the reports last night.

Ironically he is heading negotiations on a free trade agreement with the E.U. and in September when U.K. Trade Secretary Liz truss paid a flying visit to the capital confirmed that New Zealand was in line to negotiate a free trade agreement with a post-Brexit U.K.

“In our discussions today we reiterated the commitment shared between Prime Minister Boris Johnson and Prime Minister Jacinda Ardern to move quickly towards a Free Trade Agreement as soon as the U.K. is in a position to do so,” he said.

“Today, we also discussed areas where it is important for us to step up progress to find mutually acceptable solutions that do not disadvantage New Zealand traders as a result of Brexit.”

That was (presumably) a reference to the tariff rate quotas which has been an ongoing issue within the relationship for over two years now.

It would be one of the great ironies of history if New Zealand were to find itself shut out of the British lamb market after the country had left the E.U.

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