• Ian Fletcher

The EU/NZ Free Trade Agreement – Good, or Bad?

News last week of the signing in Brussels of the EU/New Zealand Free Trade Agreement (FTA). Four years in the making, and already some controversy among agricultural groups, who think a little longer at the negotiating table might have secured a better deal for beef producers, in particular. How should we assess the result – good, or bad? IAN FLETCHER – who has extensive experience around the tables in which this deal was negotiated, has spent years consulting to apicultural groups, and recently was elected chair of the Mānuka Honey Appellation Society – seeks to answer that question here.

Ian Fletcher.

By Ian Fletcher

Firstly, let me declare my interest: I used to work for the European Commission (a very long time ago – 1996-1998). I was a UK civil servant on loan. My area was indeed Free Trade Agreements (and their close cousins, customs unions). My job was to write EU internal rules on FTAs in general, and then to defend the EU’s agreements in the WTO. I am a fan of the EU; I enjoyed working with one of the most creative and committed groups of people I’ve ever met, and I see the EU as a force for good in the world. Judge my comments against that background.

We only have this week’s announcements to look at – the legal text is a couple of weeks away.

New Zealand Prime Minister Jacinda Ardern and European Council President Donald Tusk in Brussels, Belgium, where an agreement in principal has been reach on a free trade agreement.

At first sight, the EU/New Zealand agreement does what the EU always said it would: their top priority was protection for Europe’s geographical indications (GIs – some 2000 food and drink products, like champagne and feta). Until we see the legal text it won’t be clear how all these GIs will be treated. But New Zealand has agreed to change its law to protect many – or most of them. At present only wines and spirit GIs are protected. It’s not all one-way: the Government has secured grandfathering for existing producers of cheese called ‘parmesan’ (meaning they can continue with the label, but no new New Zealand producers can use the term), presumably at some cost for beef exporters. Cheese called ‘feta’ will have to go – it can be made only in the relevant locations of the EU. But there’s a long transition. Brie and Camembert are fine: they’re not GIs in the EU either, so NZ producers can carry on.

The agreement also provides for full opening of the New Zealand market for other goods, some improvements (for the EU) in our already open services and investment regimes, some lengthening of copyright protection (which I think is bad, but not disastrously so). Re-sold art works will attract a royalty for the original artist or their heirs. The bottom line: the EU had a list of objectives at the outset, and they’ve achieved most of them (the notable exception may be EU pressure for extended patent length for pharmaceuticals which we have been able to resist, which is a very good result).

For New Zealand, a more mixed bag, but not a bad one. There is really good news on kiwifruit, wine and almost all seafood where early tariff elimination will put tens of millions of dollars straight into industry. Cheese producers will have opportunities, but Europe produces some great cheese, and we will struggle to find a niche in many places. Beef producers get extra quota, but they’re concerned it’s not enough. Sheepmeat access is already called ‘good’ by our own Government, and it is extended. Access for milk powder is established. Overall, not bad.

There’s a chapter on Māori economic development which seems (based on what I read on the EU website) to be good intentions, but nothing concrete (I hope I’m wrong on this, but the EU summary is written in the warm, fuzzy language that usually means nothing meaningful). Relevantly, MFAT’s press release says the chapter “defines ‘Mānuka’ as the Māori word used exclusively for the Leptospermum scoparium tree grown in Aotearoa New Zealand and derivative products such as honey and oil. It describes ‘Mānuka’ as culturally important to Māori as a tāonga and traditional medicine.” Helpful, but unlikely to be binding on the EU. It will be interesting to see what the eventual EU/Australia agreement says on this too.

There is a commitment on Paris accord climate change goals where both sides are equally invested (it’ll be much harder to get the same thing in an EU/Australia agreement, where there are real differences). International Labour organisation standards are entrenched (both sides have a good record here). A standard clause on the Treaty of Waitangi (allowing the Crown to introduce otherwise discriminatory rules to give effect to treaty obligations) is included. Other rules in areas like competition policy will change little at either end, too.

Honey will not only get its tariffs removed when the NZ-EU free trade deal comes into force, the fact that manuka and non-manuka honeys have been differentiated could set a good precedent going forward.

Honey gets a good result. The current tariff (17.3 per cent) will go, apparently only on mānuka honey, from day one. Other honey will become tariff-free three years later. Splitting mānuka and non-mānuka honey is good: it will concentrate the value of early tariff cuts on the highest value product and help demonstrate to the world that mānuka honey is not just a flavour substitute for other honeys. A real win. The result will mean that the question ‘what is mānuka honey?’ is suddenly very relevant – and we may find it’s the EU that sets the standard. I think the ‘multifloral’ idea will be hard to defend.

The New Zealand Government’s decision to recognise non-wine and spirit GIs ought to galvanise the honey industry. It’s an opportunity to make use of GI rules in the EU and China, and get good, strong protection for mānuka (and other) honey in these big markets. The industry must press the government to legislate ahead of the FTA coming into force.

What next? There’s lots more to do, so don’t pop the champagne just yet: signature, ratification and entry into force will take a couple of years. What could go wrong? Lots: the EU/Canada FTA signed in 2016 has not yet fully entered into force.

Overall? A good result. Especially when Europe is so distracted. Could be better? Yes, but the glass is more than half full. We should say thank you, pocket this deal, wait a year or two and go back for more. A very good colleague said in Brussels many years ago, “…if you want someone to accept the thin end of the wedge, don’t show them the thick end”. Wise words.


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