Summary
The EC has announced the launch of separate FTA negotiations with Australia and New Zealand. This will need to involve negotiations in sensitive agricultural sectors. How the EU prepares its TRQ offers to Australia and New Zealand in sensitive agricultural products could provide insights into how it plans to deal with the Brexit related apportionment of bilaterally negotiated TRQ access in areas of direct export interest ACP countries (e.g. bananas, sugar and rice).
In mid-May 2018 the EC announced the opening of separate FTA negotiations with Australia and New Zealand, in the hope of concluding ‘win-win trade deals’ at a time when the openness of global trade is coming under threat. The first round of negotiations is scheduled for July (1).
New Zealand exports around NZ$3.3 billion of goods to the EU ‘with meat high up on the list of products exported’. The CEO of Beef & Lamb New Zealand said an FTA would create a ‘stable and predictable trading environment’, which would create new opportunities for New Zealand exporters. Finding export markets is seen as vital to the future ‘growth and prosperity of the sheep and beef sector and New Zealand as a whole‘(1).
The CEO of the Meat Industry Association claimed New Zealand paid NZ$53 million per annum in tariffs on red meat exports to the EU. Given its contra-seasonality New Zealand is seen as having a complementary relationship with EU producers, with trade offering opportunities for EU consumers to enjoy ‘high quality red meat all year round’. Press analysis maintains New Zealand is one of only six WTO members without and FTA in place or under negotiation with the EU (1).
The Australian meat industry is also looking for increased access to the EU market given the existing low volume import quota, which effectively restricts export opportunities to the EU (1)
From an EU perspective concluding an FTA is seen as important, given the other regional FTA arrangements which have been concluded which include New Zealand and Australia (1). According to the EC’s assessment of the proposed agreements with New Zealand and Australia: ‘EU businesses face relatively less favourable conditions of access to the Australian and New Zealand markets compared to non-EU countries that have concluded free trade agreements (FTAs) with Australia and New Zealand’ and while Australia and New Zealand ‘have a low level of applied import duties, for some products both countries levy comparatively high tariffs, coupled with non-tariff barriers including different rules’ (3).
Under the agreement the EU is reportedly looking to develop exports of ‘motor equipment, machinery, chemicals, processed foods and services’. While overall the EC envisages ‘a major effort to eliminate tariff and non-tariff barriers, liberalisation and facilitation of services and investment, protection of investment, and provision for further regulatory cooperation’, it nevertheless wants to fully take ‘into account the EU’s agricultural sensitivities’ (3).
The EC believes that within the negotiations with New Zealand and Australia the size of the EU’s market ‘offers bountiful opportunities, without the need for the bloc to expose its agricultural sector to cheap imports’. Against this background the negotiating mandate given the EC ‘envisages special treatment for agricultural goods in order to protect European producers’. (2).
The EU is looking to complete the newly launched trade negotiations by October 2019.
New Zealand’s trade minister argues the UK’s withdrawal from the EU ‘did not diminish the huge potential gains’ from an FTA with the EU, since the UK accounts for only around 20% of current New Zealand-EU28 trade (2), in a context where the EU28 is New Zealand’s 3rd largest trade partner.
However this needs to be seen in a context where the UK takes 30% of New Zealand’s exports, almost double what the UK’s share of EU28 GDP would warrant
EU-New Zealand and EU-Australia Trade and UK- New Zealand and UK-Australia Trade 2017 (Value € millions)
| EU Imports | EU Exports | UK Imports | UK Exports | ||
| New Zealand | 3,393 | 5,293 | 1,017 | 979 | |
| Australia | 13,005 | 34,652 | 4,397 | 5,061 |
Source: EC Market Access Data Base
| Comment and Analysis Given the ambitions which both New Zealand and Australian meat exporters have in sensitive EU agricultural sectors the EC could face some negotiating challenges in the coming months in elaborating provisions providing ‘special treatment for agricultural goods’. The EU’s offer will need to address both the fears of EU farmers and satisfy the expectations of Australian and New Zealand meat exporter associations.Under EU trade agreements special treatment for agricultural goods normally consists of the negotiation of expanded access for imports in the context of tariff rate quota arrangements. The EU’s approach to TRQ restricted market access under the EU-New Zealand and EU-Australia FTA could potentially provide insights of interest to ACP exporters. Negotiations will be launched while the UK is still a full part of the EU. However it is not envisaged the negotiations will be completed until 6 months after the UK has formally left the EU (30th March 2019) but 15 months before the UK will be allowed to open its own unilateral trade negotiations with 3rd countries (1st January 2021). In this context the question arises: on what basis will the EU seek to negotiate TRQ restricted access for New Zealand and Australian exports in sensitive agricultural sector (e.g. beef, sugar and dairy products)? Will the EU’s offer be based on the size and market balance within an EU of 27 member states or an EU of 28 member states? The approach the EC adopts could potentially provide some insights into how the EC intends to deal with the effects of Brexit on TRQ market access negotiated under bilateral EU trade deals in areas of direct export interest to ACP countries, notably bananas, sugar and rice. |
Source:
(1) Globalmeatnews.com, ‘EU free trade agreement talks begin with Australia and New Zealand’, 23 May 2018
https://www.globalmeatnews.com/Article/2018/05/23/EU-trade-agreement-talks-begin
(2) Guardian, ‘EU talks with Australia and New Zealand deal blow to UK free trade plans’, 22nd May 2018
https://www.theguardian.com/politics/2018/may/22/eu-trade-talks-australia-new-zealand-brexit-commonwealth
(3) EC, ‘Commission staff working document executive summary of the impact assessment Accompanying the document Recommendation for a Council Decision authorising the opening of negotiations for a Free Trade Agreement with New Zealand’, 13 September 2017
http://ec.europa.eu/transparency/regdoc/rep/10102/2017/EN/SWD-2017-290-F1-EN-MAIN-PART-1.PDF