The Ministry of Foreign Affairs and Trade’s (MFAT) top trade negotiator yesterday warned of the dangers that Brexit posed to the New Zealand economy.
At the same time, he revealed the big gains New Zealand exporters are already getting from the Comprehensive and Progressive Trans Pacific Partnership (CPTPP).
Vangelis Vitalis, Deputy Secretary (Trade and Economic) was before Parliament’s Foreign Affairs and Defence Committee for its annual review of MFAT.
He said that if there was a hard Brexit, there would be very significant challenges.
“if they left without a transition agreement, then I think we there would be difficulties at the border, that we can’t control because we don’t put in place the customs officials, the Ministry of Agriculture officials that will inspect product as it comes across the border.
“Those are fundamentally in the UK’s hands.”
But New Zealand did have some agreements with Britain to cover Brexit in place.
These were a veterinary agreement, an agreement which recognised our organic standards and one which recognised our data adequacy.
“In other words, the pieces that we have with the European Union, we’ve rolled them over with the UK.
“We are one of the few economies in the world that has successfully done that across all of our parts of our trade that will in the immediate term, ensure that trade flows can continue.
“The problem that we’ll face in the immediate term will be whether or not both the UK and the continent have got sufficient customs administration officials to be able to facilitate the trade through the border, including border inspection and so on
“But in terms of the New Zealand approach, in terms of the framework that we’ve established, I’m confident that that is robust and in place.
“If Brexit happens, we are in a good position.”
Vitalis said that New Zealand wanted to do a trade deal with Britain if it leaves the EU.
But there are problems. The biggest is the question of tariff-rate quotas which are quotas for the duty-free export of meat and dairy products to Britain and the EU.
These have been arbitrarily split by Britain and the EU to apply if Brexit happens, but New Zealand (and the USA, Australia and a number of other agricultural exporters) question the way the split has been arrived at.
Vitalis gave as an example the butter quota, which was 76,693 tonnes of butter.
“We’ve got that preference.
“There’s a question, but there is no question in my mind.
“But there clearly appears to be a question in the mind of Brussels and London how to deal with those tariff rate quotas that were negotiated in good faith with us at the end of the Uruguay Round, which, of course, was in 1995.
“So those are that complicated contextual problem that we’re having to deal with in terms of dealing with Brexit.”
But New Zealand is also negotiating a free trade deal with the European Union. Those talks are currently taking place in Wellington, and there are problems.
Vitalis said New Zealand had a “very, very big challenge” with the EU over some environmental matters it wanted in the agreement.
He said the talks this week had made no progress on the question of fossil fuel subsidy reform.
“[I still cannot understand why that is so difficult for the European Union, particularly as they have three sentences in the Singapore EU free trade agreement that explicitly reference fossil fuel subsidy reform, “ he said.
“That they can’t even agree that with us I find very disappointing.”
“The second one that I am really struggling to understand is the European Union’s position on fishery subsidies, where we have essentially the same position at the World Trade Organisation where we both want ambitious commitments on this.
“But the EU won’t do it in our free trade agreement.”
Answering questions from Labour MP, Louisa Wall, Vitalis said that including a Treaty of Waitangi “exception” in trade agreements was non-negotiable for New Zealand.
The CPTPP (for example) contains a Treaty of Waitangi exception that explicitly allows the government to adopt any policy it considers necessary to fulfil its obligations to Māori.
“We have not been successful with the European Union thus far, but it remains something that we continue to pursue with them,” he said.
Wall asked about the broader issue of indigenous people and trade agreements.
Vitalis said that was one of the issues that New Zealand would want to talk to the UK about when negotiations began on its trade agreement.
Speaking on Newshub Nation last month, British High Commissioner, Laura Clark said engaging with Māoridom and ensuring their interests were considered during the drafting of the Free Trade Agreement was important.
“I have got a particularly high place or high priority on building the UK’s relationship with Māoridom across New Zealand, across the board,” she said.
“That is about trading links, cultural links, people to people links,” Clarke said.
“In any trade agreement, Māori are an important stakeholder, Māori business is really important in New Zealand.
“It is really about exploring what we can do both now, in terms of two-way trade and investment between the UK and New Zealand… but also then what we might be able to do together in a free trade agreement.”
Vitalis said the broader question of indigenous peoples’ trade was something that New Zealand would be very interested in talking to Britain about.
“Certainly it is one of the issues that we’ve been quite clear about that we would like to work together with them, not just bilaterally but also internationally, so, that if they are in a position that they have an independent trade policy from the European Union, that would be an interesting dimension to pursue with them.”
He also suggested that Maori might be able to playback to the EU and Britain the question of “geographic indicators”.
These are names like Parmesan or Scotch Whisky or Cognac.
“T here’s also an interesting question for us about what terms we would like them to protect in their market,” he said.
“And there’s a significant Maori component both to the defensive but also to the offensive interest in there.”
Answering questions from National’s Foreign Affairs spokesperson, Gerry Brownlee, Vitalis outlined the gains that new Zealand had already obtained from the CPTPP which only came into force at the beginning of the year.
- Nearly $30 million of extra frozen beef exports to Japan.
- the abolition of Japan’s 6.4 per cent tariff on Kiwifruit saved the industry $26 million immediately
- The 70 onion growers who export to Japan have had their tariffs abolished – a gain of $50,600 to each grower already.
- Mexico’s abolition of a tariff on New Zealand mussels saw an increase of 40 per cent in our exports there.
Ironically, it was at the same Parliamentary Committee only three years ago that opponents of the-then TPP came in their dozens to object to the agreement.
But the heat seems to have gone out of the trade debate now. Instead, questions yesterday focused on how to get the best out of negotiations rather than whether to conduct them at all.