Long-running trade talks with the European Union may be close to an end, with hopes Jacinda Ardern can help finalise an agreement in Brussels. But some exporters are concerned the Government may give up too much ground in the push for the finish line
In January 2019, Prime Minister Jacinda Ardern stood alongside European Commission president Jean-Claude Juncker as he spoke of his desire to wrap up a free trade agreement by the end of the year.
“We should do everything possible to conclude the trade agreement between New Zealand and the EU in the course of this year,” Juncker said, a sentiment endorsed by Ardern.
Roughly two and a half years after that initial and all too optimistic deadline, Nina Obermaier, the EU’s ambassador to New Zealand, says both sides have been negotiating “almost non-stop” since the 12th and last formal round of talks in March.
A formal signing isn’t on the cards, given the legal checks that need to take place before the official text is confirmed, but Ardern and her trade officials will surely hope to reach an agreement in principle during her time in Brussels this week.
Not that the prime minister would say as much, describing the two partners as “still in the midst of negotiations” at a press conference last week, while Obermaier is similarly reluctant to raise expectations.
“There’s a lot of momentum in these talks and as the prime minister said … we’re in the closing stages of this agreement. I will not be able to give you a precise timing for conclusion, just to say that this is really on top of our agenda, and we hope to be able to conclude this agreement at these negotiations very shortly.”
That caution is not unwarranted, however, with some obstacles to be overcome before negotiators can give up their early starts and late finishes.
Chief among those is the EU’s market access offer for Kiwi meat and dairy exporters, with New Zealand still dissatisfied more than two years after then-trade minister David Parker derided its “paltry” initial proposal.
“An outcome where 99 percent of the market remains closed for products that account for over 20 percent of New Zealand’s total goods exports simply isn’t credible for a negotiation which both sides started by agreeing to ‘aim for liberalisation of all tariffs’.”
– Kimberly Crewther, Dairy Companies Association
At the time, Parker confirmed a strong agriculture access offer was a red line for Kiwi negotiators, and sector representatives feel little has improved since then.
“I haven’t been backward in coming forward with my disappointment: the European market access offer to date, it has been very low, and it doesn’t meet what we need to grow that market for our companies,” says Meat Industry Association chief executive Sirma Karapeeva, who has flown to Brussels for the negotiations.
Karapeeva says it is for the Government to decide what it will accept, but cautions beef exporters will not be able to celebrate a deal that falls short of the “gold standard” given the implications and potential precedent set for future trade deals.
Dairy Companies Association of New Zealand executive director Kimberly Crewther, also in Europe for the negotiations, says the current offer (as reported through EU leaks) would provide the lowest level of initial market access opening in any FTA negotiated by New Zealand.
“An outcome where 99 percent of the market remains closed for products that account for over 20 percent of New Zealand’s total goods exports simply isn’t credible for a negotiation which both sides started by agreeing to ‘aim for liberalisation of all tariffs’,” Crewther says.
The industry still holds concerns about the EU’s demands around geographical indications protecting items produced in certain parts of Europe.
Both Karapeeva and Crewther hope an improved offer may still be on the way, and say the Government should hold off on closing talks until that happens – but there are signs they may be disappointed.
“The rationale for New Zealand and Europe to work closer together has only become stronger. What we’ve seen during this conflict is who our friends are, and New Zealand was with us right from the start when this war broke out.”
– Nina Obermaier, EU Ambassador
Asked by Newsroom what New Zealand’s red lines were heading into the closing stages of talks, Trade and Export Growth Minister Damien O’Connor avoided a direct answer but hinted the greater good could outweigh the specific demands of the meat and dairy sector.
“Of course, all those commodities and those products are important to us, but we’ve got a lot of other things as well and it’s a far more complex negotiation now than it was 20 or 30 years ago.”
Obermaier says she has “full understanding” for the industry’s position but notes the EU is pushing for improvements from the New Zealand side too, such as the need for better procurement access.
One potential incentive for both sides to give ground may be the uncertainty provoked by Russia’s invasion of Ukraine.
Reuters reported last week that 15 EU governments called for the bloc to accelerate the conclusion of trade agreements, citing different world powers pushing for leadership and new alliances being formed.
“The rationale for New Zealand and Europe to work closer together has only become stronger. What we’ve seen during this conflict is who our friends are, and New Zealand was with us right from the start when this war broke out,” Obermaier says.
Whether that sentiment can override the protectionist tendencies of some EU nations will be the multimillion-dollar question for the dairy and meat industries.