NZ losing out in EU trade without modern FTA
By Pattrick Smellie
Sept. 16 (BusinessDesk) - New Zealand exporters are at a "growing competitive disadvantage" to competitors in European
markets in the absence of a modern free trade agreement with the European Union, says the New Zealand International
Business Forum in a paper advocating that negotiations begin as soon as possible.
The rules governing trade with the EU date back to the outcomes of the 1994 Uruguay Round of the General Agreement of
Trade and Tariffs, whereas "most of Europe's trading partners have already negotiated or are currently working on
various preferential trade agreements," says the report.
"New Zealand exporters still face some formidable tariff barriers into Europe and a range of so-called 'non-tariff
barriers', which exacerbate the growing competitive disadvantage caused by others' preferential agreements."
The NZIBF push follows yesterday's release of a refreshed trade policy agenda by the New Zealand government, which
proposes to 'pivot' towards Europe and Latin America while continuing to build on its deepening Asia region trade
relationships, and apparently giving up for now on hopes of FTAs with India or the Gulf States, where momentum has
stalled.
It also follows a paper published in July by the Brussels-based European Centre for International Political Economy that
nominated New Zealand as "the unexpected candidate" for a new generation of FTAs that the EU is likely to want to
pursue, especially if the current Trans-Pacific Partnership negotiations are successful.
"The EU-New Zealand FTA would match the regulatory disciplines of the TPP, as well as open up the door towards Australia
and ASEAN," the ECIPE paper said. "This door could very well be Europe’s last chance of overtaking TPP."
New Zealand would be a logical negotiating partner rather than Australia, because it was a smaller economy and "thereby
less threatening", and because there was strong political endorsement from Britain and Germany for an EU-New Zealand FTA
to be attempted.
Also in New Zealand's favour was the fact that it was not a producer of grains or sugar, which are very politically
sensitive in Europe.
"If an FTA cannot be done with New Zealand, it cannot be done at all," said ECIPE, noting that the absence of FTAs with
Australia, New Zealand and Brunei represented "a blind spot worth US$1.5 trillion", even though New Zealand takes only
0.2 percent of the EU's total exports and is ranked by size as the region's 56th trading partner.
From New Zealand's perspective, the EU is the third-largest trading partner, its third-ranked export market and one of
the top two sources for imports.
A decision about whether to launch negotiations is expected later this year.
"Although the relationship is in reasonable shape, many New Zealand exports still face barriers at the border or behind
it, which add costs, generate uncertainty or in some cases, even make trade uneconomic," said NZIBF executive director
Stephen Jacobi.
“A high quality ambitious and comprehensive FTA with the EU is strongly in the interests of the New Zealand business
community, and would be good for Europe too."
The ECIPE paper promotes an FTA with New Zealand as part of an EU strategy to engage more deeply with the Asia-Pacific
region, where New Zealand has deep and evolving trade relationships already and where the balance of global economic
activity is shifting.
"This eastern shift in the world's economic centre of gravity is undisputed," the ECIPE paper says. "And so is the
relative decline in importance of Europe's domestic markets.
"Given that Europe’s aggregate income fall from TPP will be equal to the gains the EU expects from TTIP (the US/EU
equivalent to TPP currently under negotiation), Europe is left with no option but to negotiate with each of the TPP and
ASEAN countries to secure exports. The picture is especially worrisome for EU exporters of agricultural products," ECIPE
researchers said.
(BusinessDesk)