A classic European free-trader is how one New Zealand diplomat describes European Union Agriculture Commissioner Phil Hogan.
He’s ager to clear away obstacles for European exports but not so keen when the boot is on the other foot.
The man himself, of course, rejects the description.
“I come from Ireland and 80% of everything we produce we export.
“So, the notion that I would be anything other than a free-trader is certainly something I can’t understand.”
Wow.
The EU has suddenly found religion and the completion of free-trade talks on terms entirely satisfactory to beef and dairy farmers significantly sidelined from the European market in recent years by eye-wateringly high tariffs must now be a mere formality.
Is it too late to cancel the first-class airline tickets and high-priced accommodation waiting for NZ’s trade negotiators heading to Brussels this week to again lock horns with their EU counterparts?
Not so fast.
While the EU wants to set an example in the era of Trump and rising trade protectionism Hogan says it won’t be at the cost of its own farmers being eaten alive by super-efficient rivals from Down Under.
The protectionist spirit remains alive and well in the EU, with the commission only last month disposing of the last of 374,000 tonnes of skim milk powder – roughly equal to NZ’s annual production of SMP – it acquired to shore up demand and shield its farmers from a dip in prices between 2015 and 2017.
Hogan said it will be a tough sell to dairy farmers back home to clear such a large stockpile one day and on the next back an open and liberal free-trade situation with a very competitive dairy country like NZ.
“So there will be sensitivities.”
Cutting a better deal for beef exporters might be even tougher.
Exporters here have access to several EU beef quotas created under the auspices of the World Trade Organisation.
But the tonnages are relatively small and high in-quota tariffs mean NZ exporters are easily undercut by low-cost rivals and don’t sell large volumes to the EU.
And the 1300 tonnes set aside for NZ’s exclusive use is so tiny it caused former trade minister Lockwood Smith to once observe to this newspaper that not much more than the amount produced in a year from his Northland farm would fill the quota.
Unpromisingly for NZ exporters, European beef producers are in the midst of a price slump, which could deepen if Irish producers are shut out of the British market by a no-deal Brexit next month.
“We have 116% self-sufficiency in beef at the moment … the producers of beef in the EU would be concerned about further access for any country,” Hogan said.
Since a 45,000-tonne annual quota for hormone-free beef was created for qualifying countries after the EU lost a case at the WTO a decade ago NZ exporters have used a mere 900 tonnes.
Meat industry sources dispute Hogan’s figures but his choosing to highlight what the EU sees as low use of the quota suggests it sees beef as a lower priority for NZ and something its negotiators might be able to more easily railroad their counterparts on.
Certainly, NZ risks being left in the dust by beef superpowers in the Mercosur group of South American countries, the United States and Australia, all of whom are in the middle of talks for free-trade deals with the EU.
However, the EU is in a negotiation and for it to get what it wants it must offer something in return or risk the other side walking away.
“There has to be give and take to get a deal and this is what we are going to negotiate,” Hogan says.
So what can NZ offer to persuade the EU to prise open the door to its lucrative but highly protected markets?
Signing up to its system of legal protections for products linked to European place names, known as Geographic Indications (GIs), is top of the list.
Along with dairy producers in the US and Australia, the NZ industry has for years fought against the appropriation of food names it believes have long since passed into common use and are not the property of any one country or continent.
NZ dairy companies also worry giving ground on names like feta and parmesan could lead to claims on common commodities like cheddar and edam that make up a far larger share of revenue for the industry.
Hogan denies the EU is trying to squeeze out its competitors.
“If NZ produces sufficient evidence and data to show that the products are generic then the EU will accept that argument.”
Hogan says he has an ally in the NZ wine industry, however, which created its own register of names after Parliament passed the Geographical Indications (Wines and Spirits) Registration Act in 2017.
“The wine industry, in particular, are telling me on my visit here to NZ that they want to continue their ambitious programme of expanding into as many geographic areas as possible.
“In the wine trade it is true the significant price premium they are able to get on the world market, particularly in the European markets, is relating to this designation.”
The case for GIs might make sense to the producers of Marlborough sauvignon blanc or Central Otago pinot noir who surely aren’t about to be mugged by the EU’s trade negotiators.
Not even the EU can claim those names and producers are glad for the extra legal protections it gives them in overseas markets where the increasing cache of NZ wines makes them ever-more susceptible to being counterfeited.
In its recently concluded trade deal, Japan agreed to restrict its producers from using the names of 200 products registered as GIs by the EU.
Try selling the case for GIs to producers of those products in NZ.
