Both sides agreed last year to begin work to size up the benefits of a deal and since then NZ officials and ministers have been lobbying furiously to get the Europeans to agree to begin negotiations.
Those efforts stepped up in the past fortnight with Trade Minister Tim Groser, Primary Industries Minister Nathan Guy, and Associate Trade Minister Todd McClay fanning out across the 28-country bloc.
Groser said he was briefed by EU Trade Commissioner Cecilia Malmstrom on a recent European trade ministers’ meeting where the possibility of negotiations with NZ was given preliminary consideration.
“We had a very positive discussion but the key decision as to whether or not the commission will seek a formal mandate for an FTA with NZ … that is likely to come to a head during the PM’s visit later this year.”
Key’s trip will coincide with the latter stages of the Rugby World Cup in October.
Trade sources said that in reality the European Commission would not go through the formality of asking member states for a mandate to begin trade negotiations with NZ without knowing it had their backing for a deal.
No announcement during Key’s trip or a cancellation would likely mean NZ’s chances of trade talks with the EU had been dashed.
Consequently ministers have stepped up lobbying of individual EU members with Groser early this month pushing NZ’s case with European trade counterparts at an OECD meeting in Paris. At the same time Guy met Polish and Irish agricultural ministers and McClay met British, French and Spanish trade ministers.
Sources point to France, Ireland and Italy by virtue of their protectionist agricultural lobbies as the biggest obstacles to NZ getting the green light for negotiations. At the other end of the spectrum the UK and the Netherlands are understood to be in NZ’s corner.
Groser said the fact that NZ – along with Australia – was one of only six of the 160-member World Trade Organisation without either a free trade deal with the EU or one under negotiation was viewed sympathetically by the Europeans.
“They understand the political force of that for Australia and NZ.”
After long showing little interest in a free trade deal with the EU the Australians have upped the ante in the past 12 months and in April signed a political framework agreement seen as a prerequisite for starting trade talks with the EU.
NZ signed a similar agreement last year and Groser acknowledged there was the potential for either a trilateral negotiation involving Australia, NZ and the EU, or for the EU to negotiate with the two Antipodeans separately but with one closely followed by the other.
Meat companies fear such a scenario could lead to some of NZ’s recently under-used sheep meat export quota of 218,000 tonnes being reallocated to Australian rivals in return for gains in other areas such as the European dairy market.
Groser said the possibility of Australia and NZ being played off against each other in contemporaneous negotiations was a risk but better than no deal at all.
“We can’t just dictate to countries our preferred option, so I have emphasised that it is the result that is important and there are different ways of achieving it.”
Less painful ways of getting a deal over the line could include the promise of agricultural co-operation agreements or partnerships with the Europeans.
Groser said these had been used in previous negotiations in Asia and Latin America to soothe local farmers anxious about increased competition from NZ. By offering expertise and technology the NZ Government was helping them increase their own production and ability to compete with imported competition on a level footing.
He said he was keeping an open mind on what NZ could offer EU countries with more developed farming systems but whatever it was, it was likely to be led by the private sector with the Government more in the background than it had been in co-operation agreements offered as part of Asian FTAs.
“Our brand on agriculture is so strong that this is the number one thing that people think they can gain from a closer economic relationship with NZ because it really isn’t about accessing our domestic market, which is already wide open.”
The Government’s agricultural trade envoy, Mike Petersen, said one possibility was somehow linking NZ companies active in Asian markets to help boost European exports to the region.
