New Zealand now stands between the United Kingdom and its hopes of entering the Comprehensive and Progressive Trans Pacific Partnership Trade Agreement (CPTPP).
POLITIK understands New Zealand is prepared to veto the UK joining the agreement if we do not get vastly improved access for agricultural products into the UK.
Ideally, New Zealand would like to return to 1972 before Britain joined what is now the European Union when it had virtually unfettered access for meat and dairy products into the UK market.
The oppurtunity to improve access comes with the UK and New Zealand Trade Ministers yesterday announcing that they would shortly begin negotiations on a Free Trade Agreement between the two countries.
The announcement was marked by a Beehive press conference featuring Trade Minister David Parker, the Prime Minister, Jacinda Ardern and British High Commissioner, Laura Clarke.
Clarke made it clear that Britain’s objective in this part of the world was to become a member of the CPTPP.
“Part of the point of Brexit, of the UK leaving the European Union is to strengthen its relationships with the rest of the world to reach out and build its relationships in the Asia Pacific far more,” she said.
“So we’re applying for ASEAN dialogue partner status, for example.
“Once we’ve done the New Zealand and Australia free trade agreements we are absolutely interested in the CPTPP and contributing to the UK’s economy and trading heft and making it even more global. “
But the High Commissioner indicated some reluctance to give New Zealand access for agricultural exports back at pre-EU levels 1972 levels.
Asked if New Zealand could return to the levels of access it had for its agricultural exports before Britain joined what was then the European Economic Community in 1973, she said: “We share an ambition to liberalise tariffs as much as possible, both on agricultural goods, but also, of course, the UK would like to see tariffs on gin Currently at five per cent reduced.”
“It will be a whole piece negotiation.
“There will be some areas that will be tough parts to negotiate and others where I think we will start with pretty much a shared ambition.”
In 1973, New Zealand exported 165,811 tonnes of butter to the UK, but by 2012 the UK had slipped to being New Zealand’s 45th largest butter market. Cheese was phased out in 1977.
Under the 1981 sheepmeat agreements with the EU, New Zealand had a quota of 245,500 tonnes. That has steadily reduced, and in 2018 we shipped 42,878 tonnes of sheepmeat to Britain.
The sheepmeat market is governed by the Tariff Rate Quota, which effectively limits New Zealand exports to 228,389 tonnes across all of the European Union.
That quota must now be divided up between the remaining 27 EU countries and the UK. New Zealand is protesting this at the World Trade Organisation, and those negotiations continue.
The British Government last night published the results of a public consultation about a Free Trade Agreement with New Zealand.
It underlined the concern the British have about increased agricultural exports from New Zealand.
“The need to balance tariff reduction, in order to promote an FTA with New Zealand, with the potential negative impacts on the UK’s meat and dairy sectors was a point repeatedly made,” it says.
Parker said much of the agreement would be able to be negotiated easily.
“I think we should knock off that easy stuff really quickly,” he said.
But there is still uncertainty about the outcome of the UK-EU Brexit negotiations and New Zealand would not want to agree to a British FTA until it knows what deals it has finalised with the EU.
And in a clear reference to the agricultural issues, he indicated these would be held over until near the end of the negotiations.
“Some of the more contentious parts, as I say, are slightly contingent on the Brexit EU negotiations and will also, according to the advice that I’ve had from the Ministry of Foreign Affairs and Trade, likely required face to face meetings to close,” he said.
It is here that New Zealand can elect to walk away if it doesn’t get improved agricultural access and simply go on to block the UK from joining the CPTPP.
The only danger with that approach is that it could then be left with the separate negotiations in Geneva over the Tariff Rate Quotas to determine sheepmeat and dairy access to the UK.
Parker was careful to point out that the agreement would not include some of the stumbling blocks that derailed the Trans Pacific Partnership, such as the Investor-State Dispute Settlement procedures.
There are also proposals to ease the movement of people, particularly business people between the UK and New Zealand.
“One of the things that we’re interested in is looking at what we can do on temporary movement of people for services, trade, for example,” he said.
“And lots of these things will be a shared interest to both of us.
“They just reduce friction, make it easier for people to sell their goods, sell their services, have those dimensions, which are also very creative as well. It’s not just about selling stuff.”
But the crux of the FTA will be the agricultural access and whether New Zealand elects to use its CPTPP veto powers to win a good deal.
External commentators did not miss that point.
Stephen Jacobi, Executive Director of the New Zealand International Business Forum, said the UK would be a welcome member of the CPTPP.
“Much will depend however on the economic policies and regulatory settings the UK adopts on leaving the EU,” he said.
“ We urge our British friends to embrace openness and global connectivity which has proved so successful for economies like New Zealand, Australia, Singapore and Chile.”
The chair of the Dairy Companies Association of NZ, Malcolm Bailey, said “A high-quality FTA between the UK and New Zealand will be an important pathway for the UK, should it wish to join the wider CPTPP. “
There are other issues, particularly with respect to the environment.
The Financial Times reported two weeks ago that the door had been left open to Britain allowing imports of US chlorine-dipped chicken to secure a trade deal with Washington, in a compromise plan that would see the product subject to tariffs to protect UK producers.
This raises questions about how committed the UK might be to high environmental standards more generally.
The High Commissioner said that Britain wasn’t planning to relax its environmental standards.
“Be absolutely clear that we’re going to keep the highest possible environmental standards in terms of animal welfare and labour and social standards,” she said.
“Leaving the EU is absolutely not a race to the bottom in any way.
“And we’re very clear that we’re going to maintain high standards.
“And that would be an opening position for the UK.”
The assumption in Wellington is that New Zealand is so small concerning the UK, that it is as much for political as economic reasons that the British want a deal.
And they want to join the CPTPP.
For once in our negotiations with Britain, we have some cards to play.