At the start of this year, following the United Kingdom’s final break from the European Union, both the UK and the EU reapportioned long-standing import quotas, which give third countries preferential access to their markets for agricultural goods.
NZ opposed the changes since the EU and the UK first came up with the proposal in 2017 to split the quotas based on trade flows to their respective markets during the previous three years.
NZ trade officials led a chorus of criticism of the quota-splitting proposal at the World Trade Organisation (WTO) last November.
NZ’s comments were endorsed by Russia, the United States, Canada, India, Australia, Mexico, Paraguay and Uruguay, who all agreed splitting the quotas in the manner proposed by the EU and the UK undermined existing market access.
The countries also claimed the EU and the UK had failed to consult with them properly about the changes
But since then most of those countries have cut deals, and according to a Wellington insider just NZ and Russia are still in negotiations with the EU and the UK at the WTO in Geneva.
The quota split has the potential to be most damaging to NZ sheepmeat exporters, which have seen their tariff-free quota to the UK and the remaining EU member states halved from 228,000 tonnes prior to Brexit to 114,000t for each of the UK and the EU markets on January 1.
Meat exporters say the split illegally takes from them the flexibility to export up to 228,000t of sheepmeat annually to either market without incurring tariffs and negotiated in previous trade agreements.
While increasing sheepmeat exports to China has meant the pre-Brexit EU quota had not come close to being fully utilised for a number of years, the NZ meat industry is reluctant to see it diminished in case it were needed again if the trade with China were to fall away.
The EU-UK proposal also watered down NZ’s 74,000t EU butter quota.
Dairy Companies Association executive director Kimberly Crewther says she understood negotiations were ongoing.
“Our quotas were pretty significant … so it is reassuring that NZ officials are continuing to engage,” Crewther said.
Smaller beef quotas are also affected.
If it is unable to get a satisfactory settlement from the EU and the UK, the NZ government could sue them at the WTO for compensation although so far it has given no indication that it is getting ready to take a case.
