November Trade Update from MFAT

16 November 2018 – Edition #3

Highlights

Brexit Negotiations

· The UK Cabinet has endorsed a deal reached between negotiators on the UK’s withdrawal from the EU. The deal will be considered by a special meeting of EU leaders on 25 November, after which it needs to be adopted by the UK and European Parliaments before it can enter into force.

· Reaction to the deal from the UK parliament has been mixed. There were several government resignations on 15 November, including Brexit Secretary Dominic Raab.

· The deal provides for a transition period from when the UK exits the EU on 29 March through until December 2020. During this period the terms under which third parties trade into the UK and the EU are expected to remain largely unchanged.

· Considerable uncertainty remains and a range of outcomes remain possible. Businesses and other potentially affected parties are encouraged to continue to plan for all possible scenarios, including a “no deal” Brexit.

European Union- New Zealand FTA

· A second round of negotiations was held in Wellington on 8-12 October.

· Further progress was made in a number of areas. Agreement was reached on the use of self-certification of origin, which will reduce red-tape for businesses and eliminate the need for third-party or government-issued certification.

· We are pressing to take forward an exchange of offers on market access as soon as we can and we are preparing for a third round of talks in Brussels in February 2019.

United Kingdom and New Zealand FTA

· Public consultations by the UK Government on a future UK-NZ FTA concluded in October.

· Public consultations in New Zealand are expected to be launched in late November.

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Brexit: Negotiations on the UK’s Withdrawal

Key Developments

· UK Cabinet endorsed a provisional Brexit deal reached between negotiators on 14 November. The deal includes a Draft Withdrawal (WA) Agreement and an Outline Political Declaration on the future economic relationship. (See the UK government’s explanatory note on the draft Withdrawal Agreement.)

· Officials are analysing the deal and its implications for New Zealand. Importantly, it allows for a transition period from when the UK exits the EU on 29 March 2019 through until December 2020, during which the conditions for third countries trading with the EU and the UK are expected to remain largely unchanged.

· While a significant milestone, a number of steps remain before the deal can enter into force. EU leaders will meet on 25 November to consider the deal. After that, it needs to be adopted by both the UK and European Parliaments. The UK Parliament will consider the deal twice: first by passing a motion in support of the deal as a whole in mid-December; and then by passing implementing legislation in the New Year. The European Parliament will consider the deal after that.

· Considerable uncertainty remains around these remaining processes. A range of outcomes - including a “no deal” Brexit - remain possible.

What is New Zealand doing?

· The New Zealand government is working to secure continuity and stability regarding the conditions for our existing trade into the UK and EU. Officials are undertaking analysis and contingency planning for a range of scenarios, including a “no deal” Brexit.

· New Zealand is working to protect its current market access to both the EU and the UK, including with regard to the EU’s WTO tariff rate quotas. We are engaging with decision-makers in the UK and EU, as well as formally in Geneva, to stress the importance of arriving at an outcome that leaves us no worse off, and we have put forward alternative solutions to this end.

· Given the uncertainty around whether a deal will be ratified by all parties, businesses and other potentially affected parties are encouraged to consider the possible implications of the UK’s exit for them, and to continue planning for a range of possible scenarios, including a “no deal” Brexit.

· The UK and EU have released a series of papers that outline the implications for UK and EU businesses of a no-deal Brexit. These papers can be found here:

o UK technical papers

o UK Partnership Pack Preparing for a No Deal EU Exit

o European preparedness notices

Regular updates and further background information on Brexit can be found on the Ministry for Foreign Affairs and Trade website. If you have questions or concerns, please get in touch with us at DM-EUR@mfat.govt.nz.

European Union - New Zealand FTA

Key Developments

· A second round of Free Trade Agreement (FTA) negotiations between New Zealand and the EU was held in Wellington on 8-12 October.

· As with the first round discussions were constructive, with further text agreed across a wide range of areas. Agreement was reached on the use of self-certification of origin. This will reduce red-tape for businesses and eliminate the need for third-party or government-issued certification.

· We are pressing to take forward an exchange of offers on market access as soon as we can and we are preparing for a third round of talks in Brussels in February 2019.

· Thank you to those who came to our public meetings in August/September to discuss the EU-NZ FTA, and to provide input on the government’s Trade for All policy. This input will be considered by officials and by the new, independent Trade for All advisory board, to be chaired by David Pine. We aim to announce the new policy around June.

Further information

· For more information on New Zealand’s overall objectives for an EU-NZ FTA, details of future events, and a brief summary of developments in each negotiating round, see MFAT’s website.

· The EU’s text proposals are also available on the European Commission website.

· Watch lead negotiator Martin Harvey's video update on the second round here (link to Twitter).

· Anyone with an interest in the agreement is welcome to submit feedback or questions at any time by email at EU-FTA@mfat.govt.nz

United Kingdom and New Zealand FTA

Key Developments

· The UK and NZ governments have publicly signalled their intention to negotiate a bilateral FTA after the UK’s exit from the EU. The UK has identified New Zealand (together with Australia and the US) as a top priority for FTA negotiations. UK domestic consultations on an FTA with NZ concluded on 26 October.

· Officials are assessing the implications of the provisional Brexit deal agreed between the UK and the EU for prospects for a UK-NZ FTA. The draft Withdrawal Agreement allows the UK to negotiate trade agreements with third parties once it leaves the EU in March 2019. However, such agreements would not be able to come into effect until after the UK formally leaves the EU common customs union.

What is New Zealand doing?

· NZ and UK officials are laying the groundwork for the launch of bilateral FTA negotiations. There has also been good progress towards ensuring regulatory continuity in a post-Brexit environment, including through agreeing to recognise one another’s conformity assessments and veterinary standards.

· The New Zealand Government is expected to launch public consultations on a future FTA with the UK in November. The call for submissions will run until early February 2019. For updates and more information visit www.mfat.govt.nz.

EU Product Environment Footprint Consultation

· The European Commission has launched a series of consultation processes on potential policy applications for the Environmental Footprint (PEF) methods. This is a part of the transition phase for PEF. New Zealand industry may have an interest in participating in the questionnaire survey which is located on the EU website here.

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