The visit by European Union Trade Commissioner Cecilia Malmstrom is the culmination of years of effort by NZ governments to bag a free-trade deal with the 28-country trading bloc.
However, exporters can be forgiven for keeping the champagne on ice as they contemplate Malmstrom’s recent proposal for carving up long-standing quotas for sheep meat, dairy and beef exports to the EU.
In the case of sheep meat NZ can export up to 228,000 tonnes to the EU free of tariffs.
While less significant for dairy and beef the sheep meat quota underpins the EU as the industry’s single most valuable market.
Last month Malmstrom asked member states to approve the commission’s negotiating position with NZ and other countries over the future of their EU quotas following Brexit in March 2019.
For sheep meat the proposal would see the quota split down the middle – half being allocated for exports to the United Kingdom and the other half to sales to the 27 countries remaining in the EU.
NZ exporters now able to send all 228,000 tonnes to either the UK or the continent free of tariffs would be able to send only half that amount before a 50% out-of-quota tariff kicks in.
Beef + Lamb NZ policy and advocacy general manager Dave Harrison said the proposal limits NZ’s ability to redirect exports to either the UK or the continent in response to changing market conditions.
The quota was originally negotiated by NZ during the 1970s and was reaffirmed in the Uruguay round of global trade talks in the mid 1990s.
“Flexibility is a key part of what we negotiated and this takes that away.”
Last September NZ’s ambassador to the World Trade Organisation along with ambassadors from six other countries with EU export quotas wrote to the EU and UK representatives at the WTO in Geneva.
In the letter the countries rejected suggestions the quotas be split – a move they said flew in the face of WTO rules that state no country should be left any worse off by new trade agreements.
Harrison said by formally seeking a negotiating mandate the EU’s trade negotiators have basically thumbed their nose at those countries’ concerns.
“They are couching it as being an interim position but it does look like they are ploughing on with the approach that doesn’t meet our needs.”
Trade Minister David Parker said he intended to raise the matter with Malmstrom during her visit.
“Our message to the EU continues to be that there is a better way to resolve this issue – through working with concerned WTO members and being open to finding creative solutions rather than adding to the strains in the international trade environment by seeking to push through an approach that would not properly honour their WTO commitments and would leave us worse off.”
Last November Parker floated an alternative proposal to deal with the quotas during a visit here by his British counterpart Liam Fox.
It is understood that involved replicating the 228,000-tonne sheep meat quota in full across both the UK and the EU.
By administering the quotas from NZ it would be possible for export licences to be revoked once the existing quota limit had been exceeded.
That would ensure farmers here and in the EU and the UK are no worse off, as all sides claim they want, and as the EU and the UK are legally obliged to provide.
However, when asked this week Parker said he had as yet had no formal response to the proposal.
