The EU and New Zealand concluded negotiations for a trade agreement on 30 June, which is expected to increase bilateral trade between the two by 30%.
The deal includes measures to eliminate all tariffs on EU exports to New Zealand and guarantee duty-free access on 97% of New Zealand’s current exports to the EU.
The trade agreement is the first struck by the EU to include potential sanctions for violations of environmental or labour standards announced last week in the block’s communication – The power of trade partnerships: together for green and just economic growth.
The deal has a dedicated sustainable food systems chapter, a dedicated trade and gender equality article and a dedicated provision on trade and fossil fuel subsidies reform.
The agricultural package was among the most contested, with farmers on both sides expressing disappointment, including agricultural co-ops.
Asked about the agricultural package, New Zealand trade minister Damien O’Connor said: “It’s probably fair to say that no one likes it, so we must have got it about right,” reported Reuters.
Responding to the deal, Copa and Cogeca, the European voice of agri farmers and their co-operatives, raised concerns about its members’ ability to cope with market pressures. The apex argued that additional market access to NZ exporters would impact European farmers at a time when they are trying to invest in sustainability.
Copa and Cogeca secretary-general Pekka Pesonen said: “Copa and Cogeca welcome the fact that the EU production safety standards (eg hormone-free beef) and GIs (geographical indications) have been recognised under the agreement.
“We acknowledge the commitments that the EU and New Zealand have agreed with regards to incorporating the principles of the Paris agreement and sustainability in international trade. However, we know that for key sectors such as dairy, sheep and beef production, this agreement is painful. Therefore, we call for a proper management and monitoring of tariff rate quotas (TRQs) on imports of agricultural products to avoid market failure.”
The agreement will protect the full list of EU wines and spirits and 163 of the most renowned traditional EU products, such as Asiago, Feta, Comté or Queso Manchego cheeses, Istarski pršut ham, Lübecker Marzipan, Elia Kalamatas olives.
NZ’s dairy giant Fonterra has also criticised the deal. The co-op, owned by around 10,500 farmers, said the deal was disappointing for NZ’s dairy sector, adding that it reflected a degree of protectionism afflicting the EU dairy industry.
Simon Tucker, Fonterra director global sustainability, stakeholder affairs and trade, said: “The agreement provides some small pockets of access for certain products over time, but overall commercial opportunities for products such as butter, cheese, milk powder and key proteins are constrained relative to the size of the EU market by a combination of small permanent quotas, in-quota tariff rates, and quota administration requirements.
“At the same time, the outcomes for the EU on geographical indications (GIs) mean that Fonterra, alongside other New Zealand cheese producers, will no longer be able to use the term ‘feta’ after a transition period of nine years. Fonterra has, however, retained the ability to use the terms parmesan and gruyere.
“Access to markets and the elimination of barriers to trade is critical at a time of growing geopolitical uncertainty to provide optionality for exporters, particularly into markets where customers and consumers value New Zealand sustainability and provenance credentials.
“New Zealand’s future export success, and the jobs that this creates across regional New Zealand, depend on addressing the large trade barriers remaining across many markets as part of New Zealand’s future trade agenda, including through any upgrades or reviews of the NZ-EU FTA.”
Meanwhile, politicians on both sides praised the deal. European Commission president, Ursula von der Leyen, said that New Zealand is a key partner in the Indo-Pacific region. “This trade agreement brings major opportunities for our companies, our farmers and our consumers, on both sides,” she said. “It can help increase trade between us by 30%. It includes unprecedented social and climate commitments. This new agreement between the European Union and New Zealand comes at an important geopolitical moment. Democracies – like ours – work together and deliver for people.”
NZ Prime Minister, Jacinda Ardern, also said: “Our EU-NZ FTA is expected to increase the value of New Zealand’s exports to the EU by up to NZ$1.8bn per year from 2035. For comparison that’s more lucrative than the benefits derived from our recent UK FTA.
“It’s a strategically important and economically beneficial deal that comes at a crucial time in our export led Covid-19 recovery.
“It delivers tangible gains for exporters into a restrictive agricultural market. It cuts costs and red tape for exporters and opens up new high value market opportunities and increases our economic resilience through diversifying the markets that we can more freely export into.
“The complete removal of duties on the majority of products New Zealand exports to the EU is a major achievement in a deal that covers market access into 27 European countries.”
Negotiations between the EU and New Zealand started in 2018. The deal will require approval by trade ministers of all 27 EU member states and the European Parliament and ratification by New Zealand, all of which could take between 18 and 24 months.