At this time of yuletide cheer we might pause and reflect on the gathering issues confronting Trade Minister David Parker. While New Zealand has the CPTPP under its belt and showing results, the wider prospects are daunting with serious challenges arising principally from the European Union on top of the erosion of the capabilities of the World Trade Organisation.
For years while the EU has uttered endless bromides over prospects for a free trade agreement with NZ, the reality is somewhat different. There have been some steps forward but no breakthrough. Now the going will become harder, especially as the question of how current NZ exports into the EU are divvied up between the Continent and the UK.
Firstly, for the next 12 months (that is, beyond the general election) the EU will be preoccupied with Britain’s exit and fashioning a new trade agreement across the English Channel. This will take up most of London’s trade negotiating bandwidth as it will prioritise other trade deals in terms of economic significance.
This suggests NZ will fall well behind, lagging after the United States, Australia and Canada. President Trump has already tempted UK Prime Minister Boris Johnson with the world’s greatest FTA, or words to that effect.
Interestingly, the usually well-briefed Financial Times has also raised the prospects of the UK joining the CPTPP, noting Britain’s long association, over centuries, with the Pacific.
We can discount the influence of Crawford Falconer, former NZ chief trade negotiator, now at the helm of London’s new trade department. He understands who pays his salary and carries with him scars from battles with former minister and trade negotiator Tim Groser.
Secondly, the EU now has a new over-arching Green policy touching all elements of the community, from climate change to transport and trade. Given the EU is the largest economy, its decisions impact around the world.
Trade? Yes. The European Green Deal proposes taxing emissions for two reasons. The first is to stimulate action on climate change issues and secondly, to prevent European businesses immigrating to countries with less severe restrictions on greenhouse gases. The EU proposes a new border adjustment carbon tax, possibly as early as 2021. This will tax emissions associated with imports from countries with weaker climate goals and would strike both the US and China.
It will also encourage action against countries like NZ on the basis of tackling emissions created by transport, principally shipping. NZ’s new carbon-free by 2050 may offer some relief well down the track.
Now there is another challenge from our friends in Brussels. The EU has signed an agreement with China on “geographic indicators”. In principle, this is designed to protect specific regional products with the best example being champagne. However, the EU negotiators have secured agreement on a much broader range of products.
The NZ dairy industry has already raised the alarm flag. DCANZ, the industry’s trade body, says the ongoing expansion of the EU’s geographic indication (GI) agenda will now prevent dairy producers from exporting feta and other commonly produced cheeses to the high-value Chinese market.
NZ’s dairy exports to China were valued at over $5bn in 2018, with cheese exports across all products valued at over $340m. DCANZ executive director Kimberly Crewther says the EU-China Agreement is part of a rapidly growing number of trade agreements the EU has negotiated with third countries such as Japan, Mexico, Vietnam, and Singapore.
Through these agreements the EU is seeking to monopolise a wide range of cheese terms that are in common use globally and produced in significant quantities outside of the EU. Opportunities for cheeses NZ has produced for decades and never called any other name, like parmesan, feta and gruyere, are gradually being eroded, she says.
In 2017, the EU registered ‘Danbo’ as a protected term, despite previous acknowledgement by the Danish dairy industry that Danbo is a generic cheese name and the significant global production outside of Europe, including in NZ.
More recently, the EU has registered ‘Havarti’ as a protected term for sole use by Denmark in the EU, despite a majority of the global production being outside Denmark and the EU’s own implicit recognition of the term as generic through the prior Codex standard setting process and to trade rules under the World Trade Organisation (WTO).
Crewther says the registration of Danbo and Havarti as protected GIs raises serious questions about the integrity of the EU’s GI registration process and framework. DCANZ has no objection to the EU’s protections for cheese names that are genuinely unique to a particular geography. However, past recognition of genericity via international agreements, and a significant history of production in other geographies as a result of shared cultural heritage, should be respected as disqualifying criteria.
The approach of protecting internationally recognised, and commonly used, terms demonstrates that the flawed EU GI system is too often used for the EU’s own self-interest and economic gain, and not for legitimate intellectual property protection, she says.
If Havarti met the definition of a GI, then there are no cheese names that wouldn’t. There is no certainty around where this attempt to claw back commonly traded cheese names will end.
These developments come amid ongoing EU-NZ FTA negotiations, in which the EU is seeking changes to NZ’s current regulatory settings in order to protect 2,200 terms with provision for additional terms to be protected in the future.
DCANZ will continue to register its concerns that the extensive GI framework proposed by the EU in the negotiations could stifle local investment and innovation in local cheesemaking, limit consumer choice in NZ, and significantly undermine NZ’s opportunity for added value cheese exports, he says.