The industry was jolted by Britain’s announcement last week that it had agreed with the European Union how import quotas would be split after it left the 28-country bloc in 2019.
It was thought Britain had agreed to take part of the 228,000 tonne tariff-free quota previously covering the whole EU. The British portion would be based on its previous three years of imports.
The news sent the meat industry into a tailspin with fears NZ exporters could lose the flexibility current arrangements gave them to send as much as the entire quota entitlement either to the UK or other 27 countries as market conditions dictated.
“We cannot contemplate a situation where the quality or quantity of NZ’s existing … market access rights with the EU or the UK are eroded,” Beef + Lamb NZ chairman James Parsons said.
The announcement also blindsided officials at the Ministry of Foreign Affairs and Trade who for months had been asking for formal talks with EU and UK counterparts to discuss the quota’s future.
One senior official said assurances had also been given the quota would not be split.
“But then to say we have the solution and it is the precise solution that NZ and others has absolutely explicitly rejected just seems to me to be the rankest stupidity,” the official said.
The official said the EU had failed to abide by World Trade Organisation rules to properly consult countries affected by changes to quotas.
NZ had not been alone in expressing its outrage at the unilateral actions of the British and the Europeans.
A dozen countries had significant import quotas giving low-tariff access for agricultural exports to the EU.
Six countries led by the US wrote a fortnight ago to the UK and EU delegation heads at the WTO headquarters in Geneva rejecting the idea that quotas should be redrawn on the basis of historical trade averages and reminding them of their responsibility to ensure no country should be left worse off.
“These (quotas) were achieved through a delicate balance of concessions and entitlements that is fundamental to the global trade architecture today … we attach a particular importance to the stability and continuity of those rights.”
A source close to the Government said with the US now in its corner NZ was in a stronger position to argue its case.
“When NZ was talking about this stuff it was treated not with disdain but it was taken very lightly by the Europeans but the minute the US signed on to this letter all of sudden this became a major issue.”
The Government’s agricultural trade envoy Mike Petersen said the US weighing in could focus the minds of EU and British politicians and bureaucrats still struggling to get on top of all the Brexit detail.
“I would put a bit more weight on the fact that there is a general misunderstanding about the importance of the WTO in these arrangements … even at political level.”
But the EU and the UK were wrong if they thought they could get away with a “cosy deal” between themselves.
Parsons said the potential fallout for exporters if the quota was split was not to be underestimated.
One possible scenario following Brexit involved a significant slowing in the British economy and a weakening in sterling.
If that happened NZ exporters faced slack demand made worse by fewer opportunities to divert exports to the EU because of a re-allocation of quota to the UK.
That nightmare scenario could be compounded by a glut of local lamb on the British market if the UK couldn’t export to the EU.
