EU and NZ officials officially kick off negotiations for an FTA that is expected to boost goods trading by 50%

EU and NZ officials officially kick off negotiations for an FTA that is expected to boost goods trading by 50%

The impending free trade deal between New Zealand and the European Union is expected to boost goods trading by close to 50%, according to an impact assessment.

And both negotiating parties are looking to make the agreement a “blueprint” for future free trade agreements (FTAs) around the world.

On Thursday, EU Commissioner for Trade Cecilia Malmström and Minister for Trade and Export Growth David Parker officially launched (FTA) negotiations.

New Zealand has been looking to hammer out a deal for years and Thursday’s announcement comes off the back of the EU launching similar talks with Australia earlier in the week.

At a media conference in Parliament, Parker and Malmström were upbeat about the prospects of an FTA between the two trading blocks.

Last year, two-way trade was valued at $NZ21.5 billion ($NZ16 billion excluding the UK) – trade with the EU makes up 10% of New Zealand’s total exports.

Malmström says the deal will work to facilitate even more trade as well as creating more jobs and widening consumer choices in both the EU and New Zealand.

“[The deal] is economically important – we have made an impact assessment and overall, trading goods between us could increase by almost 50%, if we have an ambitious agreement,” she says.

This will come through reduced tariffs in some areas, as well as reducing trading obstacles such as red tape, bureaucracy, difficult procedures to get a certificate and licences.

"If we can facilitate this, while defending the very high level of consumer protection that we both have, I think this is an excellent thing,” Malmström says.

Although the impact on services won’t be quite as high, she says there will still be an increase in this area.

It is likely issues around agriculture, particularly dairy, will be one of the major sticking points in the negotiations.

EU countries have traditionally been worried about the impact of any FTAs on their agriculture sector.

Malmström says she does expect this to be an area of “sensitivity,” but this is not unusual.

“In all negotiations I have been involved with, during my time as Trade Commissioner, agriculture has always been the difficult thing in the end, because it is sensitive for many countries.”

But she says there have been a series of ambitious and, for some countries, painful reforms, in the EU’s agricultural policy.

When it comes to negotiations around this issue, she says there is “give and take.”

“We are very well prepared. We have spent a lot of time going through the elements and the parameters of the negotiations.”

A blueprint for other FTAs

Both Parker and Malmström are optimistic about areas of the deal that will look to bolster sustainable development in environmental and labour rights.

“The World Trade Organisation (WTO) is not up to it, so we need to set new standards,” Malmström says.

“With the high standards you have here and the ambitions of the Government, I’m looking forward to these discussions.

“I think we can lead the way and actually make a blueprint here that can inspire others.”

Parker agrees.

“It’s one of the most exciting things for me, that we can not only do good for ourselves but also set out rules that are a guide to how other trade agreements should look for the benefit of the world.

“Through this agreement, I think that we won’t just be improving our economies, but we will be making the world a better place.”

The first formal round of negotiations between the respective sides' teams of negotiators will take place in Brussels from 16 to 20 July.

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Bravo this government if they conclude such an agreement on favourable terms for NZ. And the same thing again if proves to be ditto for the UK. Brexit forever!

This is worth working for with every effort possible. Whatever the faults of the EU, it has established regulatory and commercial standards that are a lone lighthouse in our increasingly wild and murky global trading environment.

One certain effect of any FTA, if it's achieved, will be that many New Zealand businesses will need to lift their game. Business and professional practices focused on dumping undifferentiated product into China just won't cut it.

And this required lift in production standards and professional behaviour will be a formidable benefit to our whole society and common environment, not merely the monetary economy.

Best wishes to our team.

It's already the case that businesses who want to export goods and services to the EU, have to produce those goods and services to high standards.

How do you expect the FTA to affect that?

Because, Ms de Meanour, an FTA works two ways. As well as encouraging more NZ businesses and production to meet EU standards, NZers will have an enlarged choice of EU products and services alongside our own. Competing in - and with - high product standards lifts them locally. And, in a host of sectors, NZ needs - really needs - to lift them.

So EU products and services are currently unable to access the NZ market? Which ones, and what are the barriers to market access for them?

Pop into European supermarkets that might give you an idea .

Nope. It's undoubtedly true that goods are available in European shops that are not available here. But that is not evidence that European producers are being prevented by legislative trade barriers from supplying goods to New Zealand.

It may be simply that they don't think it likely to be profitable to supply such a small market so far away.

A trade agreement is not going to change that.

Ms de Meanour, think beyond the existence or non-existence of 'legislative trade barriers' to EU companies supplying goods to New Zealand. The point is encouragement of increased interactivity. NZ trade envoy Mike Peterson recently made the key point well (Stuff, 19 June), saying "trade agreements were more about opening minds than markets and provided important frameworks for companies to partner up and invest". We've seen exactly this increased interactivity with China since that FTA.

In my estimation an FTA with the EU will offer NZ significantly greater professional, business and environmental benefit from this increased interactivity. But I'm not interested in seeing New Zealand become an ever expanding low-value commodity producer looking for ever expanded low-value commodity markets.

Oh, "frameworks for companies to partner up and invest"?

Apart from frameworks for Europeans who might want to invest in New Zealand housing, or land, or oil and gas exploration, of course. Presumably the FTA won't include anything for them.

I hope this deal also attracts the interest of European investors in our inefficient markets such as construction, retail, banking, e-commerce to name a few.

Yes, good thoughts, Advisor. In business, as in life, those above you draw you up, those below you pull you down.

I wouldn't hold your breath CETA (Canada/ EU) took 7 years to negotiate and was almost torpedoed at the 11th hour by one region of Belgium

So, we should have an FTA with the EU by, say 2030, if they really get behind it. Not known for their speed that lot.

The Canada deal is a very useful bargaining chip for Italy it seems. At the moment, Italy has said they will veto it as the Canadians don't recognise their 250 odd regional delicacies. Presumably the Italians are open to bribery, which the EU are very good at, called such grand things as Regional Assistance and Common Agricultural Policy, but really a way of getting the local politicians to do what the EU tells them. The EU is wonderful at grandiose plans and gestures but at heart is an autocratic imperial bureaucracy, inspired by the empires of Rome, Karl der Grosse (Charlemagne) and Napoleon, where the intelligent few make the decisions for the many.

It must include more accessibility for our food, dairy, agricultural, seafood and wine industries, too one sided otherwise.
EU protectionism must be lowered to enable this. Difficult but achievable.if the negoitaters have the mindset.
They in return will be able to set up and use our FTA with China etc for many and more ventures.
But well done for opening up the the talks. NZ may be able get back to a pre EU Britain situation.

Beware of