In one interview I listened to Malmstrom suggested the UK and EU would simply split the quotas according to average trade flows over three recent years.
That is sub-optimal for NZ exporters because it reduces the flexibility to choose where one exports to in Europe and it was also arrogant and therefore a concern for the forthcoming negotiation.
These tariff rate quotas (TRQs) are legally binding commitments that were entered into by the EU in the Uruguay round of world trade talks.
They need to be changed through a negotiation in the World Trade Organisation using procedures set out in Article XXVIII.
Essentially, these provisions say, in this context, that NZ should be no worse off access-wise as a result of changes to the membership of the EU.
By splitting the TRQs in the way proposed NZ will be worse off because we will have less flexibility.
Article XXVIII is not perfect. It does allow the EU to make unilateral changes but it also gives NZ the right to be compensated by increasing tariffs against EU imports.
Hopefully, things won’t come to retaliation.
The point is that the EU needs to negotiate with NZ and other affected parties.
It cannot act unilaterally.
I hope that message is being delivered forcefully by the Government.
My firm view is that NZ should be seeking, as part of the negotiation in the WTO, not only the maintenance of the TRQ levels into the EU but compensation because the value of these commitments is being diminished.
The United Kingdom is a big hunk of the EU economy.
Having an economy of that size and with so many consumers leave the EU must affect the demand for our product.
I suspect strongly that the United States and others will be adopting a similar negotiation position in product areas where their interests are affected.
By reaching agreement in the WTO on these terms we will be in a good position to begin the free-trade negotiations on the products in question.
Products such as butter and sheep meat will almost certainly be deemed sensitive by the EU.
The prospects of achieving full free trade in these products, at least in the short term, are poor.
It is likely the EU will seek a staged liberalisation and might well seek to use a tariff quota with increasing levels of access as the mechanism to stage the expansion in our exports.
The splitting of our existing quota arrangement between the EU and UK will potentially disadvantage NZ considerably in the negotiation.
We would be starting the negotiation with a much lower, smaller level of quota access to the EU than we enjoy now.
Current trade levels should be the starting point for any negotiation on quota expansion, not an artificially reduced level.
The splitting of the quota with the UK post-Brexit causes further problems.
It assumes NZ will be content with the UK operating an EU-style protectionist regime for agriculture.
That is not my expectation and I hope all farmers agree with me.
We want complete, free access to the UK market for our key agricultural products.
While full free trade in all of agriculture might take several years to achieve with the EU I hope the negotiating dynamic will be different.
It is clear full, free trade in all of agriculture might take many years with the EU.
But for the NZ-UK free-trade agreement I hope full, free trade will be achievable after only a very short transition period – if not on day one.
No one expects the free-trade negotiations between NZ and the EU and NZ and the UK to be easy.
But let’s not hamper ourselves by agreeing to this EU proposal to split the tarrif rate quotas.
We need a strong message to the EU at the WTO that this proposal is unacceptable.
