EU, New Zealand Begin Setting Stage for Trade Talks
Preparations for potential trade talks between the EU and New Zealand are set to gear up, officials announced on 29 October, following a meeting between EU Commission President Jean-Claude Juncker, Council President Donald Tusk, and New Zealand Prime Minister John Key.
“The European Union and New Zealand are longstanding and close partners,” the three leaders said afterward. “Today we committed to start the process for negotiations to achieve swiftly a deep and comprehensive high-quality Free Trade Agreement.”
The talks are not set to launch straight away, however, with various other steps – such as a feasibility study – expected so that the two sides can better determine the scope of what they aim to cover in a free trade deal.
The EU and New Zealand have an existing bilateral mutual recognition agreement, signed in 1999, that aims to facilitate trade in industrial goods by reducing technical barriers. The pact mainly covers goods such as medical products and devices, telecommunications, pressure, and low voltage equipment, as well as machinery, according to the European Commission.
The EU, which ranked as New Zealand’s second largest trading partner after Australia last year, largely exports manufactured goods to the Pacific country, while importing primarily agricultural products. The total trade in goods between the EU and New Zealand amounted to €7.9 billion in 2014.
This planned FTA was referred to as a Commission goal in its new trade and investment strategy document released in mid-October, as part of its broader effort to strengthen its trade relations with economies in the Asia-Pacific region. The European Commission is also seeking a mandate from the European Council to start trade talks with Australia, among other countries. (See Bridges Weekly, 15 October 2015)
In a separate statement, New Zealand Prime Minister John Key called the proposed negotiations “a part of the government’s wider plan to diversify the economy by building strong trade, investment, and economic ties around the world.” This announcement follows New Zealand’s recent success in concluding a trade deal with 11 other Pacific Rim countries, known as the Trans-Pacific Partnership (TPP) Agreement, as well negotiating an FTA with South Korea. (See Bridges Weekly, 8 October 2015)
The new agreement is expected to provide New Zealand “greater access to European market” and facilitate trade transactions between the two parties, Key indicated.
New Zealand Winegrowers, the national organisation for the country’s grape and wine industry containing approximately 850 grower members and 700 winery members, welcomed the new proposed agreement. The EU market is the country’s largest wine market, accounting for an excess of 30 percent of the total wine exports and amounting to over NZ$460 million (€278.7 million at today’s exchange rate).
The “secure and competitive access” to the EU market is essential for New Zealand’s wine industry to achieve its desired growth, the Winegrowers’ CEO Philip Gregan stated. The country’s wine exports currently value approximately at NZ$1.47 billion (€890 million), and the industry has set a goal of reaching NZ$2 billion (€1.2 billion) by the year 2020.
How agriculture will be treated in the deal is a key question. While the Commission’s new trade strategy refers to the importance of protecting the EU’s agricultural sensitivities in a trade deal with Wellington, farm trade has traditionally been a key issue area for New Zealand in other such negotiations, including the TPP, where dairy played a key role in the end-stage of the talks.
New Zealand-based dairy multinational Fonterra has said, however, that it views the move to launch EU trade talks as a positive step forward, with group director of co-operative affairs Miles Hurrell telling Radio New Zealand that the group is “certain there will be a positive outcome in the long term.”
“Dairy for us in Europe at this point in time is not that significant. We have free trade agreements - those in play or in place now - with most of our trading partners around the world with the exception of Europe so we are very positive about the announcement overnight,” he said.
ICTSD reporting; “New Zealand and Europe inch towards free trade negotiations,” STUFF NATION, 30 October 2015; “EU Agrees to advance FTA talks with New Zealand,” NBR NEWS, 30 October 2015; “Fonterra positive on European trade talks,” RADIO NEW ZEALAND NEWS, 30 October 2015.