Slow progress on EU trade talks

Bright talk of a swift trade deal with the EU has continued to recede, with trade officials urging patience in the face of anger over the Europeans' latest offer, Sam Sachdeva reports

Hopes of trade talks with the European Union wrapping up in 2020 have been all but extinguished, with trade officials urging Kiwi exporters to remain patient despite frustrations over the current impasse.

The FTA talks were formally launched in mid-2018, with Prime Minister Jacinda Ardern and then-European Commission president Jean-Claude Juncker expressing optimism that a deal could be done by the end of 2019.

However, progress has been slower than hoped for, with the level of access to the EU for Kiwi agriculture exporters a particular cause for concern.

In June, Trade and Export Growth Minister David Parker lashed out at the EU over the quality of its market access offer leaked ahead of negotiations, saying the deal was unpalatable in its current form.

Despite the chasm between the two sides, there are not yet any further talks set down for the rest of the year.

New Zealand’s impending election is partly to blame, with the EU reluctant to schedule more discussions until it knows exactly which government it will be negotiating with.

Ongoing talks between the EU and the United Kingdom for a post-Brexit trade deal are also a complication: both the EU and New Zealand may alter their approach to talks depending on the final shape of the UK agreement.

While it is possible another round of talks may take place in the last quarter of 2020, particularly given political pressure, meaningful progress is unlikely to be made.

That would stretch talks into 2021, with no guarantees around a date for conclusion.

“It’s supposed to be a free trade agreement, not a protected trade agreement or a non-trade agreement.”

An EU summary of the June talks described customs fees imposed by New Zealand were “the most sensitive issue in the text”, but noted disappointment with its own second offer on market access.

Newsroom understands representatives from the Ministry of Foreign Affairs and Trade contacted stakeholders last week, updating them on the talks and encouraging them to remain patient despite the lack of progress.

Kiwi trade officials have emphasised that the EU’s approach to market access so far is typical of their previous negotiations, and that the potential gains from New Zealand’s third-largest export market is worth the back and forth.

Speaking to Newsroom, Federated Farmers national president Andrew Hoggard said the EU needed to deliver “a hell of a better offer” on market access for agricultural goods if New Zealand was to sign on to any deal.

“It’s supposed to be a free trade agreement, not a protected trade agreement or a non-trade agreement.”

Hoggard said the Government needed to stick to its guns on the issue, as any concessions now could set a precedent for future trade negotiations with other nations.

Fears from the EU and other trading partners about their markets being flooded with New Zealand imports did not match the reality on the ground, he said.

“It’s really frustrating, because we look at particularly dairy - that seems to be the most sacred cows, excuse the pun, of all of the agricultural trade - and New Zealand’s about two percent of world production. We're not growing like we used to do.”

Increasing the amount of freely tradeable dairy exports would smooth out prices and reduce market volatility which hurt the EU as much as it did New Zealand.

Hoggard said Federated Farmers also held some concerns about EU proposals for geographic indicators to protect foodstuffs made in certain parts of Europe, as many had become “very, very generic” items produced all over the world.

National: Govt 'hands off' on EU

National’s foreign affairs spokesman Simon Bridges said it was “a great shame” that there had not been more significant progress to date.

While New Zealand had no control over the length and flow-on effects of UK-EU trade talks, Bridges said his party felt Parker had left New Zealand’s negotiations in the hands of officials instead of taking a more active role.

“He rightly went off the deep end when details of the agreement leaked...and we agree with that, but I just repeat - there’s a sense within National that the minister and the Government has left it to officials too much...

“Whether you call it naivety or undue optimism or just a lack of good old plain experience, I was surprised when there were relatively bold pronouncements from the PM and to some extent, Minister Parker about the progress being made and the timeframe that this was going on.”

Bridges said he was not opposed in principle to the idea of countervailing tariffs, but had more practical concerns about the effect of such a move.

“When the little kid hits the big kid, the big kid’s got stronger arms, and so I don't know that that'll get us very, very far.”

Concluding a deal with the EU would be National’s top trade priority if it won power at the election, he said.

A spokesman for Parker said he was unavailable for comment.

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