The morning after the unexpected June 23 vote Beef + Lamb NZ emailed all farmers to reassure them with a somewhat contradictory message.
On one hand it said it did not expect any erosion of NZ’s 228,000 tonnes of tariff-free access to European and British markets.
On the other the levy-funded body said it would be focusing on “ensuring that we maintain our overall quota access into the UK and EU as the UK renegotiates its access into the EU” as Brexit plays out.
The reality is farmers in the United Kingdom and European Union can be expected to pounce on the redrawing of these trade relationships to argue for a pegging back of competition from NZ imports.
Arguing the case for British farmers, National Farmers Union (NFU) livestock adviser John Royle said the composition of NZ’s exports to the UK and the EU had changed out of all recognition since the quota was negotiated in the 1990s.
Frozen carcases had been significantly substituted with chilled and boned-out cuts (see attached table below) which compete more directly with locally produced fresh lamb.
Furthermore NZ imports were increasingly competing during the peak of the British kill from June through to Christmas.
Royle said British farmers saw no reason why they should be bound by EU quotas even on a pro-rata basis if the UK was no longer part of Europe.
Instead the NFU would press Whitehall to use Brexit to ensure competition from NZ was cut back to the shoulders of the British season.
“We will be pretty clear to say that the EU-NZ quota is EU and that stays with the remaining 27 member states.”
The only situation in which Royle could see the UK continuing to take NZ lamb as part of an EU quota was if the British government as part of its bid to retain access to the single market agreed to carry over some existing quota obligations.
But if the UK lost tariff-free access to Europe even more pressure would come on to water down NZ’s quota rights.
'We will be pretty clear to say that the EU-NZ quota is EU and that stays with the remaining 27 member states.'
“We would then have surplus lamb. If we can’t export it we will have to develop our own home market much more and that could mean we would look less favourably on imported product coming in.”
For B+LNZ’s general manager for market access Ben O’Brien such speculation is a mug’s game. When the UK would actually begin negotiations to exit Europe was still up in the air.
How long those would take to complete was even more uncertain. In the meantime access arrangements for the EU and UK markets would remain intact.
“We do not know much more than that and speculation is probably not very helpful.”
Where NZ felt it was on solid ground was the legal standing of its quota rights. O’Brien said the quota was a valuable asset for the industry and NZ had traded off rights in other areas to secure it during the Uruguay round of global trade talks in the mid-1990s.
“What we know is that we have a World Trade Organisation-binding commitment.”
Whether that view is merely posturing or a rock-solid legal position remains to be seen.
But NZ’s former ambassador to the WTO, now Lincoln University professor of international trade, Crawford Falconer, said NZ faces not just challenges from UK and European producers eager to protect their own patch.
Rival producers in Australia and Argentina could also put their hands up for a share of the UK and EU markets.
Both the UK and the EU will need to renegotiate tariff schedules with the WTO and need the agreement of all 167 members to do so – getting that will inevitably include horse-trading that could see some third-country quotas carved up and redistributed.
Falconer says while the quota gives NZ legal rights that is not to say these could not be overridden.
“We could argue against it in the WTO but there is nothing to stop them doing it.”
