The government has been beating the drum on the prospects for a free trade deal with the United Kingdom, which it claims is part of the wider work it is undertaking to support New Zealand’s economic recovery from Covid-19.
Following Trade Minister Damien O’Connor’s sessions with UK Trade Secretary Truss in London to push along the bilateral negotiation, officials’ teams will spend the coming weeks finalising FTA details with the aim of reaching agreement in principle in August.
Foreign Minister Nanaia Mahuta told Parliament NZ is working to achieve a high quality comprehensive trade deal.
“Our priority is a deal that delivers benefits for all New Zealanders. That includes seeking elimination on all tariffs over commercially meaningful time frames, and that takes account of our ambition across the agricultural sector”.
Mahuta reckons after five rounds of virtual engagement, there was real value in O’Connor visiting London in person. He succeeded in getting the focus back on key issues and to speed up progress.
The visit also allowed him to speak to farm leaders face to face about how both agricultural sectors stand to benefit from the agreement.
“Moving towards an agreement in principle with the UK in August will confirm the parameters of the FTA and represent a significant step towards conclusion. We’re committed to making swift progress, but our number one priority is to secure an agreement that delivers benefits for all New Zealanders”, Mahuta said.
She said NZ exporters face significant barriers in the UK, which make it hard for them to compete with other exporters Restrictive quotas – for example – apply to dairy and meat exports, and tariffs make other NZ products, including wine, apples and honey, more expensive for consumers in the UK.
“This agreement will deepen NZ’s economic ties with the UK. We’re seeking to secure ambitious and inclusive outcomes in the coming months, including through NZ’s proposed chapter dedicated to advancing Māori interests. The FTA will help address this. It is also an opportunity to lead on sustainable trade and put our Trade for All Agenda into action”.
Quite what those “Maori interests” are, how they differ from the interests of other New Zealanders, and why they should be accorded special treatment in an agreement is far from clear.
But certainly NZ farmers will be hoping the NZ negotiators will be able to match, and perhaps improve on, the terms their Australian counterparts can expect following the progress Australian PM Scott Morrison announced after his talks with Boris Johnson in London.
NZ, as Mahuta was saying earlier this month, badly needs to diversify its markets, given its rising dependence on China, which currently absorbs 30% of NZ exports.
NZ may never get back to the volumes it used to pump into the UK market, pre-1973, but there is no doubt its dairy products would be highly competitive there. Just listen to the clamour of UK producers, (who became accustomed to heavy EU subsidies). They have been shouting for their markets to be protected against NZ imports.
It is the test of O’Connor and his team of officials in the negotiation to achieve real free trade in these products, especially for the specialised products Fonterra has developed.
As Point of Order sees it, the real coup for O’Connor would be to secure superior terms to those the Australians secured.
Apparently Australia has won a zero-tariff regime for dairy products phased in over five years. Britain is still one of the world’s largest importers of dairy products.
Similar open access for meat products is another key goal for NZ. Other issues in the negotiation are foreign investment provisions, and professional digital services access.
NZ has few bargaining chips to offer in the trade negotiation, but it can offer its full backing to the UK as it seeks to join the much broader Pacific trading bloc in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
So can Damien O’Connor, a politician whose achievements so far have been relatively modest in his term with the Ardern government, surprise his countrymen with a trade deal that matches, or even surpasses, Australia’s? That would call for a victory parade like that to be accorded NZ’s world champion cricketers.