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FTA with UK: Dairy and meat exporters thrilled, but academic criticises deal

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RNZ | 1 March 2022

FTA with UK: Dairy and meat exporters thrilled, but academic criticises deal

New Zealand’s key export sectors are lauding a new free trade agreement (FTA) with the United Kingdom, saying it will deliver a significant boost to their industries.

However, it has received stiff criticism from one academic who said it was "hardly an economic bonanza".

The new deal means virtually all New Zealand’s exports into the UK would not carry a tariff. It also included specific chapters for climate change, small businesses and Māori.

It is expected to save local exporters $37 million each year on tariffs and boost the country’s gross domestic product by close to $1 billion.

"New Zealand has not had tariff-free access into the UK since Britain joined the European Economic Community (EEC) in 1973 so this deal will deliver a major boost for sheep and beef farmers and exporters," said Meat Industry Association chief executive Sirma Karapeeva.

Under the agreement, beef and lamb exports will be fully liberalised over time, with no duties from the 16th year after the deal comes into effect.

Dairy Companies Association of New Zealand (DCANZ) said it welcomed the "high-quality" FTA and was looking forward to tariff-free dairy trade after the first five years of the deal.

It said the UK was the world’s second largest dairy import market but New Zealand only supplied less than 1 percent of its dairy imports in 2021.

Access to the UK market over the past 49 years had been curtailed by tariffs that had privileged European Union members, said DCANZ chair Malcolm Bailey.

"This FTA is an important addition to New Zealand’s trade architecture. We welcome the UK’s ambitious approach to deepening its economic relations within our region."

Meanwhile, the country’s fast-growing tech sector said it was encouraged to see digital trade play a significant part in the new the deal.

"The ability to enable data flows, having agreements on things such as digital identity, working together to improve digital inclusion are all important for enabling digital trade," NZTech chief executive Graeme Muller said.

’Hardly an economic bonanza’ - academic

Auckland University professor emeritus Jane Kelsey was deeply critical of the new FTA, saying it was an attempt to recover some of the Labour government’s credibility it lost when it signed the CPTPP.

She said the chapters on Māori, small business, the environment and labour conceded that FTAs had been largely driven by the interest of big business and heightened inequality.

"Yet, these chapters do nothing to redress that imbalance."

She said these "inclusive trade" provisions were unenforceable and only promoted "cooperating activities".

Read also: UK-New Zealand FTA text

The FTA’s enforceable rules on goods, intellectual property rights, investment, financial services, and the crucial new area of digital trade were all skewed to benefit large corporate interests, she said.

Kelsey said that the "always over-optimistic" economic modelling projects a maximum gain of $970m in GDP in 15 years.

"That is about 0.3 percent of current GDP, or an increase on average of less than 0.02 percent per year over 15 years - hardly an economic bonanza."

’A Māori trade chapter with no teeth’

In a statement, Ngā Toki Whakarururanga spokesperson Pita Tipene said the FTA was "a missed opportunity to set a new bar for honouring Te Tiriti o Waitangi".

"We give them credit for trying but much of what we see in this FTA is just symbolic. There’s a Māori trade chapter with no teeth, where the UK even says it’s not committing to actually do anything.

"As for Māori making economic gains from the FTA, the only figure we’ve seen, from research for the Taumata, is a $13 million increase in GDP for a Māori asset base of $68 billion."

British High Commissioner Laura Clarke told Midday Report not everyone would be happy with the the deal, but it provided the framework to strengthen connections and there were other Māori organisations that were supportive.

The FTA was a gold-standard and ambitious and "will deliver real prosperity for both our countries", Clarke said.

The Māori chapter was significant in her view because it recognised the importance of the relationship between the UK and Māori, she said.

"It also looks to strengthen cooperation in the future by strengthening connections between our businesses, making it easier to trade, and it envisages various mechanisms for cooperation that mean we work together to make sure we are taking advantage of the opportunities presented by the Free Trade Agreement."

Liberalisation of tariffs would also bring benefits to the Māori exporting economy, she said.

"There’s also interesting language in the environment chapter, really referencing Māori role as kaitiaki and the importance of us working together on environmental protection."

 source: RNZ