Flow of goods brings NZ-EU trade agreement to life
Farmers Weekly | 9 September 2024
Flow of goods brings NZ-EU trade agreement to life
by Neal Wallace
The first consignment of New Zealand beef has arrived in Europe, and European construction supply companies are reciprocating with exports to NZ.
This is proof, according to officials in Brussels, that the free trade agreement (FTA) is working as intended.
Signed in July last year and having come into force in May, the FTA could potentially provide a $1.8 billion boost to the NZ economy by 2035.
There was some criticism at the concessions achieved by NZ, but the word in Brussels is that our negotiators achieved more than expected due to tough bargaining.
NZ successfully secured improved access for politically sensitive beef, sheepmeat and dairy products, with the terms of the FTA accepted by member states and the European Parliament.
The terms of the FTA are such they NZ could potentially supply up to 60% of the European Union’s butter imports, up from 14% currently, and NZ cheeses could make up 15% of the EU’s imported cheeses, up from 0.5% today,
Access for beef increases eightfold to 10,000 tonnes while in sheepmeat, NZ could supply up to 96% of EU imports.
In comparison, the FTA being negotiated by the EU and Mercosur and large beef-producing countries Uruguay, Argentina, Paraguay and Brazil, allows for tariff-free imports of only 99,000t of beef.
Australia is still to secure an FTA with the EU and the consensus is that it is not finalised because it broke down when Australia attempted to backtrack on mutually agreed quotas for market access.
NZ trade officials said a golden era of international trade has ended but in Brussels they term it the end of the age of innocence for trade.
The EU and China are engaged in a tit for tat dispute over imports of Chinese-made electric vehicles.
The EU is considering imposing tariffs, claiming China is competing unfairly due to excessive government financial support.
Europe’s biggest manufacturer, Volkswagen AG, announced last week it is considering closing a plant that makes electric Audi cars due to the flood of vehicles from China.
China has retaliated by targeting imports of EU dairy and brandy, and observers say the tit for tat action is only going to intensify.
What the world has previously known as free trade is being redefined in Brussels as free and fair trade.
To EU officials that means sustainability and climate change being priorities when negotiating market access.
Covid tested its supply chains, but the Ukraine-Russia war has forced a rethink, prompting Europe to diversify supplies of key products such as energy and food to ensure security.
Prior to the conflict, Europe was reliant on Russian gas but as European countries sided with Ukraine, Russian President Vladimir Putin used its supply as a political weapon.
Europe has accordingly made a huge effort to diversify away from Russian gas. The share of Russia’s pipeline gas as a percentage of EU imports dropped from over 40% in 2021 to about 8% in 2023.
In 2022, just 23% of energy was from renewables but the EU has set a goal of taking that to 42.5% by 2030.
In efforts to strengthen the supply-chain resilience, it is partnering with what it calls the G7-plus.
That group includes the G7, the world’s seven most advanced countries – Canada, France, Germany, Italy, Japan, United Kingdom and Unite States – plus sympathetic countries South Korea, Australia and NZ.
Europe is still seeking trade deals.
Negotiations with the selected Mercosur countries continue. They have been underway for 25 years, looking for opportunities in the Indo-Pacific and India.
