The EU and New Zealand want to wrap up an FTA this year – but will that come at the cost of a good deal on agriculture? Phil Hogan, the EU’s agriculture commissioner, spoke to Sam Sachdeva about the likely sticking points, a spat over tariffs, and taking on a “bully” like Donald Trump.
Standing nearly two metres tall, it’s unsurprising that Irish politician Phil Hogan has developed a reputation as “a bit of a bruiser”.
While his height may be a factor, he’s lived up to the reputation during his career, labelling a trio of UK Conservatives “the Three Stooges” over their hardline Brexit stance and banging heads together within Irish political party Fine Gael.
But it’s his current role as the European Commissioner for Agriculture and Rural Development where his tough approach may be most concerning for New Zealanders: a Politico piece about the EU-Japan FTA negotiations talked up Hogan’s stamina and negotiating manoeuvres, reporting that his Japanese counterpart at one point “was almost tearful and pleaded with Hogan to back off”.
With agriculture likely to be an area of contention during New Zealand’s own FTA negotiations with the EU, could it be a New Zealand minister in tears before the end of the year?
“I’m surprised you’d think of me in a very negative way like that,” Hogan says semi-jokingly of the suggestion he could be the bad cop in trade talks.
“It’s not as if we’re starting from a blank sheet – we know each other in terms of a product lens and what we want.”
He is bullish about the prospects for wrapping up a deal in 2019 – European Commission president Jean-Claude Juncker’s stated goal – despite fears from some New Zealand commentators about the effect of a swift negotiation on the deal’s quality.
With scoping work on a trade deal dating back to 2017, Hogan says both sides are well aware of their relative sensitivities and how they might be overcome.
“It’s not as if we’re starting from a blank sheet – we know each other in terms of a product lens and what we want.”
He points to those tough but fruitful talks with Japan, a country with a broader range of trade concerns than New Zealand, as an example of what is possible.
“We had nine items to resolve on the last day of negotiations in agriculture, and we came out of the room with a deal, so this will happen again in New Zealand … and of course we will respect each other in terms of how we do that.”
That is not to say the EU will not hold a hard line. As Hogan points out, while the European Commission’s negotiating mandate received the backing of member states, that came with the expectation it would defend their interests in agriculture – a sensitive topic in most EU trade negotiations.
Geographical indications
Geographical indications, or GIs, loom as one area of contention.
The EU has submitted a list of more than 2000 food, wine and spirits products which it wants to be protected as GIs, meaning only European producers would be able to use their names in New Zealand marketing – something which could attract criticism for products like feta cheese, kalamata olives and prosecco.
While the GIs have been a sticking point in negotiations elsewhere, Hogan believes that won’t be the case in New Zealand, given the last Government passed legislation to provide GI protection for New Zealand wines and spirits.
The EU is already in discussions with the Kiwi dairy industry, trying to “debunk some of the myths” around GIs including the false suggestion it has laid claim to mozzarella, camembert and gouda.
Hogan believes only half a dozen products are likely to require serious negotiations, and says there are workarounds such as the “grandfathering” of pre-existing trademarks which conflict with GIs.
Outside of the FTA talks, but perhaps the most concerning issue for Kiwi exporters, is the EU’s proposal to divide up tariff rate quotas between it and the UK after Brexit.
The quotas, which set the amount of New Zealand goods like sheep meat and butter which can be exported at a lower tariff, would be split 50/50 between the UK and EU based on a three-year snapshot of past trade flows.
The Government and Kiwi exporters have been fighting against the plans, accusing the EU of a unilateral withdrawal of its World Trade Organisation commitments.
Hogan says the topic is the subject of “intense negotiations” between the two sides at the WTO in Geneva, and claims the EU is willing to give way if New Zealand can make a strong case.
However, he is dismissive of the “1+1=1” solution championed by New Zealand officials.
“You can’t have a bite of two cherries at the same item in trading terms: we have to have certainty as well from our market perspective and our stakeholder perspective about what are the intentions of New Zealand, and where is the product going to land and where is it going to go.”
Brexit clarity needed
Hogan lays the blame at the feet of the UK, saying it’s their decision to leave the EU and the possibility of a hard Brexit which has forced the tariff revisions as a contingency plan.
He believes an extension of the UK’s exit deadline is more likely than a crash out on March 29, but his sense of frustration at the country’s inability to make up its mind is clear.
“There’s an onus on the United Kingdom government in the next two, three weeks to tell us exactly what they want – to give us some evidence that they have the potential to make an agreement in the House of Commons, or an agreement that can be approved, and we don’t see that at this stage.”
While the Brexit uncertainty is doing little good for the world economy, Hogan says the US and Donald Trump should take prime responsibility for sluggish economic growth.
“I think that some of the deficits in trade that Mr Trump regularly speaks about don’t exist to the same extent [he claims].”
The Irishman once said of Trump that the only way to deal with a bully was by “bullying them back”.
“I haven’t changed my mind,” he remarks now, pointing to the truce between the EU and US after Juncker retaliated to Trump’s plans to impose tariffs on the union due to national security concerns.
“This is the sort of rhetorical evidence that I abhor: there’s no evidence of it, and I think that some of the deficits in trade that Mr Trump regularly speaks about don’t exist to the same extent [he claims].”
That protectionist streak is why the EU is working with “like-minded friends” like New Zealand, Hogan says.
A third round of EU-NZ negotiations will take place in Brussels next week, and he is optimistic that with political goodwill, a high-quality deal can be landed before the end of the year.
“Europe is open for business, New Zealand is open for business, and we want to do business.”
