Checklist: how to understand the New Zealand-EU Free Trade Agreement


New Zealand and the European Union have negotiated a free trade agreement that will reduce tariffs and tariff costs, increase some quotas for New Zealand exports and force cheese makers to stop using the word ‘feta’. “.

What is a Free Trade Agreement?

A free trade agreement, often abbreviated as an FTA, is an agreement between two or more countries to change the terms of trade between them.

Often, one of the main objectives of these agreements is market access: countries often impose customs duties on a country’s exports or limit the volume of imports that can enter the country via quotas, in order to protect their national industries from possible competition from comparable industries in other countries. nations.

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There are other aspects to a free trade agreement, such as the conditions applied to services, investments and business people from another country.

A particular issue for the New Zealand-EU FTA concerned “geographical indicators”, or the restriction of terminology used to market products originating in a particular place. Feta, for example, is considered by the EU as a typically Greek product.

So it’s not just about making the cost of trade free?

This is really not the case. New Zealand, being an export-oriented economy, has been particularly concerned with obtaining cheaper and wider access to overseas markets for agricultural exports, particularly meat and dairy products. The government has had mixed success in securing better market access under the New Zealand-EU deal.

Making a deal requires compromise. For the European Union, it wanted New Zealand to adhere to its geographical indication rules and New Zealand agreed to change the way it manages copyright. This will actually limit freedoms in some areas.

Prime Minister Jacinda Ardern kisses European Commission President Ursula von der Leyen after the announcement of the <a class=free trade agreement.” style=”width:100%;display:inline-block”/>

Glenn McConnell / Stuff

Prime Minister Jacinda Ardern kisses European Commission President Ursula von der Leyen after the announcement of the free trade agreement.

Ok, what are the details of this new FTA?

Thus, after seven years of discussions and numerous rounds of negotiations, an agreement in principle was reached early Friday between Prime Minister Jacinda Ardern and European Union President Ursula von der Leyen overnight in Brussels.

The key figures of the NZ-EU FTA are:

  • Exports to the European Union could increase by up to $1.8 billion each year, and an additional $1.4 billion in GDP could be produced for New Zealand. (It bears repeating, this is an estimate)
  • Customs duties at the EU border will be removed for 91% of New Zealand products when the deal comes into force; this figure will increase to 97% in seven years.
  • Tariffs on New Zealand products will be removed on 91% of goods currently destined for the EU and will rise to 98.5% in seven years. (Sounds extremely good, but keep in mind that exports that will retain tariffs will be the main ones, such as meat and dairy)
  • Savings to New Zealand exporters from tariff reductions would exceed $100 million per year. In particular, customs duties will be removed on kiwis, apples, mānuka honey, onions, wine and fish.

  • Less with meat and dairy, although there are some gains. A tariff on beef will drop from 20% to 7.5%. High tariffs and limited quotas on butter and cheese have effectively meant that New Zealand exporters have moved away from the EU in the past, but tariffs will drop sharply and quotas increase slightly under the agreement, which may make it a viable market.
  • On the geographical indicators front: New Zealand producers will lose the ability to call their products “feta”, “port” and “sherry” in the next nine years. “Parmesan” was not included in the list of product terms that the EU wants to protect.
  • There is also a climate component, with the two countries agreeing that they could sanction each other if they fail to comply with the Paris Climate Accord. Ardern said that would not be a concern for New Zealand. However, on the other side of the divide, Australia is seeking an FTA with Europe and a provision like this could prove more difficult.
New Zealand cheese makers must stop using the name Feta within nine years.

123rf

New Zealand cheese makers must stop using the name Feta within nine years.

Why does Europe not want our meat and dairy products? We’re all about it.

Don’t consider it a rejection. In trade jargon, agricultural imports into Europe are a ‘sensitive issue’, usually due to domestic politics and fear within agricultural sectors that an influx of New Zealand produce could damage their market position. .

This is annoying for New Zealand meat and dairy exporters. Federated Farmers also called the deal “stingy” and “worse than expected.”

Of course, no one is completely satisfied when a compromise is reached.

And now?

The negotiations have been concluded, but the agreement has not yet been signed. And the fine print is not public.

After signing, it will have to work its way through the relevant processes of both countries. In New Zealand, the agreement will be reviewed by a select committee and legislation passed to ratify it.

Then it comes into effect.

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