Saturday, March 30, 2024

EU trade deal may favour Aussies

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Leaked documents show New Zealand farmers are being lined up for a worse deal than their Australian counterparts in trade talks with the European Union.
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Trade Minister Todd McClay and his European counterpart, Cecelia Malmstrom, last month announced the completion of studies setting out the scope of negotiations for a free-trade agreement.

Two years in the making, McClay said the studies cleared the way for formal negotiations to start this year.

“NZ and the EU both recognise there are substantial benefits to be gained from free trade, and we are now one step closer to a high-quality, comprehensive FTA that can deliver great outcomes for our citizens.”

In NZ the dairy and beef industries want rid of high tariffs severely restricting trade with Europe in those commodities. Sheep meat exporters are also anxious that tariff-free access is maintained following Britain’s exit from Europe.

But if the language in the EU-NZ scoping study is anything to go by, NZ negotiators are already on the back foot.

While it says the agreement should “aim” for full tariff liberalisation it indicates this should not come at the expense of European farmers.

“Consideration should be given in negotiations that each side may have such as for certain agricultural goods, including through the use of long dismantling periods, tariff-rate quotas or any other specific treatment agreed by both sides.”

Former trade negotiator Charles Finny said such a clause suggests tariff cuts for agricultural products where they are able to be negotiated will come in over a longer period than the seven years targeted for all other industries, only apply to limited volumes restricted by a quota, or be left out of the negotiations altogether.

“We are already conceding that we are prepared to negotiate on longer phase-out periods and possible tariff-rate quotas and other specific treatments, which could mean exclusion.”

The language contrasts to that used in the recent EU-Australia FTA scoping study.

As with NZ, the EU and Australia say they will merely “aim” for full tariff liberalisation without making any firmer commitment to scrapping them.

But while the document says that for the “most sensitive products, special treatment should apply” it includes no reference to longer tariff phase-outs or quotas for agricultural products as in the NZ study. 

Finny said the difference in language between the Australian and NZ studies could be significant.

“It could mean the same thing but it is fleshed out in the NZ document and some of those things are problematic.”

Former NZ ambassador to the World Trade Organisation (WTO) and now Professor of International Trade at Lincoln University, Crawford Falconer, said the contribution to the document from the European side came from officials in Brussels who now have the not necessarily straightforward job of getting a mandate from all 28 member states to begin formal negotiations with NZ.

Longer phase-out periods and quotas will have been included to calm anxieties about the threat posed by NZ agricultural products to Europe’s farmers should they lose the protection of high tariffs.

“That to me is the minimum political message ‑ one would presume that this highlights that they feel more threatened by us on some products than they do Australia,” Falconer said.

Otherwise the document included demands typically made in all of the EU’s free-trade negotiations, including for greater legal protections for food associated with European place names such as Parma ham or Parmigiano-Reggiano cheese.

One exception to this standard format – and not included in the EU-Australia study ‑ was reference to state-sanctioned export monopolies.

Falconer said the clause will have been aimed at Zespri and Fonterra and included at the insistence of the Europeans who would be hoping it would provide them an extra bargaining chip in negotiations.

“They will be able to argue that ‘well, we can’t give you full liberalisation on the market access side because you do not appear to have done anything on the export monopoly side’.”

Falconer said neither study gave indications that the EU was willing to go any further in restricting subsidies paid to its farmers than it was already signed up to at the WTO and was already being negotiated multilaterally.

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