NZ exporters who have been tracking the threat of global trade wars triggered by President Donald Trump will have been relieved by the apparent success of EU-President Jean-Claude Juncker on his visit to the White House.
He won agreement from Trump to “work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods.”
In a sense this appears to be a victory for Trump, whose threats to raise tariffs on key EU exports, particularly cars, sent tremors through European industrial heartlands including the big car manufacturing centres of Wolfsburg, Stuttgart and Munich. Those threats forced the EU to the negotiating table.
For NZ traders the signal is positive: not only does the threat diminish the threat of trade wars damaging export markets but an important element in the Juncker concession to Trump is the EU’s agreement to work towards zero non-tariff barriers. That should embrace quotas.
For NZ, which is in the process of negotiating a free trade agreement with the EU, the issue of quotas has always looked like a sticking point.
The EU’s willingness to negotiate with the US to reduce that particular barrier to trade gives fresh ammunition to the NZ negotiators.
In recent weeks the outlook for NZ’s dairy export trade has grown gloomier, and prices have correspondingly weakened. Concerns were deepened by the prospect that Trump’s trade wars would damage global trade flows.
Analysts argue that higher tariffs will hurt economic growth and potentially stymie demand for products like whole milk powder, NZ’s key dairy export product. Trade data released yesterday showed milk powder exports in June fell 25% and the quantity dropped 32%, compared with June last year, due to declines across a range of key markets, including large falls to Algeria and China.
Recent Global Dairy Trade auctions have also shown weakening demand out of China.
There has been little sign of progress with the negotiation for the upgrade of the NZ Free Trade Agreement with China, which NZ dairy exporters hoped would produce broader and easier accesss to the Chinese market.
