As readers well know, we at Point of Order never rest. So, we break your post-Christmas reverie to report some very good news for New Zealand from Britain’s exit from the European Union.
The Christmas Eve deal ensures there will be no tariffs and no quotas on British-EU trade.
Neither side will impose tariffs on goods being traded and a zero quota agreement means there will be no limits on the quantity of any type of goods that could be traded. Furthermore, the UK will be able to strike free trade deals with other countries including NZ.
In essence, with both sides agreeing there will be no tariffs and quotas, NZ avoids the worst-possible alternative which would seriously impact NZ exports into the EU and Britain. Exporters trading across the UK and the EU may still face issues. It’s as good as NZ negotiators hoped for.
The question of tariff rate quotas remains open. This is part of the devil-in-the-detail negotiations which will continue. Under TRQ, exports can enter a market up to a certain quantity then, if beyond, a higher tariff rate would apply.
Settling Britain’s exit now opens bandwidth in Brussels for the EU to resume access trade access agreements – free trade agreements – with NZ and others.
Britain’s departure from the EU’s Customs Union means UK will also be able to strike free trade agreements with other countries including and specifically NZ. However, from January 1 there will be more friction for businesses, which will face more paperwork when exporting goods, and customs checks.
The agreement is also expected to cover financial services, some 80% of British exports, by recognising professional qualifications, although the City of London’s access to the EU market will be judged on the basis of “equivalence” a regulatory authorisation that can be withdrawn unilaterally at as little as 30 days’ notice in some cases.
Britain secured continued access to non-EU car parts and rules covering electric car parts, which officials said protected Japanese car manufacturers in Britain and the future of the industry in the UK
So, with the deal done, much hard work remains for NZ trade negotiators and diplomats, but the principal threat has been removed. We anticipate a more settled and normal 2021 on the trade front.