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Ardern significantly improves EU Free Trade deal

Written By: - Date published: 11:13 am, July 2nd, 2022 - 26 comments
Categories: Economy, Environment, Europe, farming, Free Trade, jacinda ardern, politicans, trade - Tags:

This week Jacinda Ardern and New Zealand concluded a free trade agreement with the European Union.

The benefits are not to be sniffed at:

  • Export revenue to the EU to grow by up to $1.8 billion annually on full implementation.
  • Duty-free access on 97% of New Zealand’s current exports to the EU; with over 91% being removed the day the FTA comes into force.
  • NZ exporters set to save approx. $110 million per annum on tariff elimination, with $100 million slashed from day one.
  • Immediate tariff elimination for all kiwifruit, wine, onions, apples, mānuka honey and manufactured goods, as well as almost all fish and seafood, and other horticulture products.
  • New quota opportunities worth over $600m in annual export revenue for dairy and red meat sector once fully implemented, with an eight-fold increase in beef access to the EU market.
  • New Zealand service providers able to access EU market on an equivalent basis to local and foreign service providers in a range of sectors including education.
  • Once fully implemented, the EU FTA delivers more to NZ GDP than the UK-FTA.
  • EU FTA becomes the 5th major trade deal in 5 years, opening new markets for NZ exporters.

But some of the response both leading up to and following the successful conclusion of the negotiations are derisory.

And Radio New Zealand should have a deep think about things.  Because its description of Ardern’s approach to negotiations as scattering stardust is the sort of misogynistic crap I expect from Mike Hosking and his ilk, not a State broadcaster.

The analysis was of a similar quality to the headline.  As an example the author, Geoff Miller said this:

And when it comes to New Zealand’s key agricultural exports, the prospects for a favourable deal are bleak.

Malcolm Bailey, the chairman of the Dairy Companies Association of New Zealand, says the EU is ‘doubling-down on keeping its market almost entirely shut to New Zealand dairy exporters’.

The EU’s initial market offer to New Zealand, leaked in 2020, included an export quota of just 1500 tonnes of cheese annually – and just 600 tonnes of butter.

The final agreement will no doubt bring some improvement on this low-ball offer, but probably not much.

The final deal was considerably improved over this rather gloomy prediction.  The deal is worth $600 million in annual export revenue for the dairy and red meat sectors once fully implemented.

Permitted cheese imports will be 25,000 tonnes a year in seven years time, starting with a figure of 8,333 tonnes on day one.

And butter imports will rise to 15,000 metric tonnes in seven years as well as there being a significant reduction in tarriffs on a further 21,000 tonnes.

Miller’s conclusion that the final agreement will improve the initial offer but probably not by much should be sufficient for him to be excluded from the pundit’s union.  Because it is clearly unquestionably wrong,

He then makes disparaging comments suggesting that New Zealand has sold its soul to the west to get a better deal but then concludes by saying this:

Jacinda Ardern is about to scatter stardust over Brussels. But it could all be in vain.

It is time for Miller to eat his words.

Following the announcement of the deal the reactions were almost universally negative.  National’s puppets, the Dairy and Beef farmer representative organisations complained that it was a very bad thing.  From Reuteurs:

Simon Tucker, a director of trade at dairy giant Fonterra (FCG.NZ), said in a statement that outcomes for dairy were very disappointing and reflect the degree of protectionism afflicting dairy trade globally.

Tucker said new commercial opportunities from the FTA for dairy products remained constrained relative to the relative size of the market.

Sirma Karapeeva, chief executive of the Meat Industry Association, added in a separate statement the FTA did not provide commercially meaningful access for meat exporters.

“With more volatility in global markets, diversification is important, and a high-quality FTA with the EU was critical in helping us achieve this,” she said.

New Zealand agriculture exporters have long struggled to get good access to the market and analysts say the outcome should not have come as a huge surprise.

I am not sure of what Karapeeva thinks is “commercially meaningful” but the deal increases duty free quota for sheep meat from 125,000 tonnes to 163,000 over the next seven years.  And beef tariffs are more than halved and access increased from 1,102 tonnes of high quality beef to 10,000 tonnes after seven years.

And there is another aspect that the farming interests appear to be completely indifferent to.  They seem to think that production of meat and dairy can continue to increase.  But the country cannot environmentally sustain any more farming and in fact we need to reduce the effects of dairy and beef farming rather dramatically if we are to meet our greenhouse emissions targets.  There is a short term potential transition for dairy and beef farming moving to the production of higher quality goods while at the same time reducing greenhouse gas emissions, something that the free trade agreement will actually help implement.  But continued growth in the sector is a misguided dream.

The opposition have also engaged in politics as usual with complaints that Ardern should have stayed longer at the table and not agreed until there was a better deal on offer.  Their arrogance and their stupidity is incredible.  Throwing tantrums and drawing out negotiations are not a way to get better deals when dealing with one of the most sophisticated trade groupings in the history of the world.

Although Todd McClay rather gave things away by praising New Zealand’s free trade agreement with the United Kingdom and with China, both of which were concluded by Labour Governments with the FTA with China having recently been upgraded.

Overall I am bemused that the predictions were so negative, the results are significantly better than what had been anticipated, yet National and its puppets get to engage in fact free rhetoric accentuated by the national broadcaster in a he said she said fashion.

There is one further aspect that opponents refuse to acknowledge.  Ardern’s standing in the world is such that she is able to gain advantage for New Zealand in a way that I don’t think any previous leader has ever been able to accomplish.  This is yet another example of her star power.

If this is an example of Jacinda scattering stardust then long may she continue to do so.

26 comments on “Ardern significantly improves EU Free Trade deal ”

  1. Matiri 1

    I was surprised to learn that New Zealand is a big exporter of onions!

  2. pat 2

    I expect both positions on the EU trade deal are tribal, there are however a few things to consider .

    Nobody knows what the net trade position will be from these changes, we may well increase our exports to the EU however that may be more than offset by a larger share of EU products and services into our domestic market….what opportunties have we provided to the EU that didnt exist before to convince them to relax (slightly) an inherently protectionist mindset?…it will not be nothing.

    We are already an exceedingly open economy, so much so that prior to this deal EU suppliers could supply the likes of (the infamous) tinned tomatoes halfway around the world and somehow still manage to considerably under-cut local suppliers….there is something rotten in the states of Brussels (nevermind the carbon miles)

    As has been noted elsewhere I expect this is less about trade and more about political solidarity with 'our team' in a renewed multi polar world…but as always with both eyes on domestic politics.

    • Poission 2.1

      The EU has a trade surplus with NZ of 3.2 b euros,and a service surplus of 1.5 b euro.

      The Dairy position will be a win for German billionaire investors (owners of SAP) who own around 3300 hecatres of Dairy farmland in southland and another 550 in canterbury.(with increased profits to flow offshore)

      The removal of eu tariffs on vehicles,shoes and clothing will be useful for the retail sector here,especially in the upmarket boutiques.

      There is also a list of 2000 food and wine brands (regional descriptions) that cannot be used here.

      My understanding there was more importance with the deal (from the EU perspective ) to remove some of the risk from our China weighting in trade for ag products,and to increase some of the high value exports that are constrained with sanctions to the EU east.

      • pat 2.1.1

        That service surplus towards the EU is somewhat of a surprise….I expect the bulk of 'services' trade is tourism and given the relative populations I would have expected either more balance or perhaps even a weighting in our favour.

  3. Patricia Bremner 3

    The outright lies just keep being repeated by the press and broadcasters.

    There needs to be an Ombudsman.

    The right wing are scene setting, and lying about housing, health and trade.

  4. Patricia Bremner 4

    angryThe outright lies just keep being repeated by the press and broadcasters.

    There needs to be an Ombudsman.

    The right wing are scene setting, and lying about housing, health and trade.

    So far Trade is looking good, housing is settling and rents stabilising and even falling in areas where there are apartments available. May health show improvements in spite of Covid “Flu and RSV. Keep it coming PM. Well Done.

  5. Treetop 5

    I looked at the greenhouse emission targets and thought that was a negative for NZ.

    The deal with the EU shores up supply as food availability is becoming more unpredictable when it comes to supply with some goods. There is scope for the quantity to be increased and food lines to be expanded.

    This deal also caters for those who can purchase the premium goods. As for onions soon inflation will increase the kg price.

  6. I think you are being particularly unfair, Micky, in, by implication, belittling the achievements of past PMs.

    After all, Key did secure a round of golf with Obama – and all NZ reflected in the glory!

    /s

  7. newsense 7

    Just the BS out of the right that made us eat terrible trade deal after terrible trade deal, and now the act of getting them more favorable terms is treated like a personal insult.

    Similar BS on the going to Aussie meme that’s popped up:

    Aussie isn’t that much better- stuff article

    I agree there is a big issue with housing and planning culture compared to some other countries. We’re not planning for apartments and we’re often missing transferring the good things we have already to the new higher density plans.

    We got a deal with an enormously protectionist bloc over the line because of the PM’s presence in Europe.

    Miller is a member of the ‘Democracy Project’ which seems to, in the majority, operate hit jobs on the government, with the ability to have the appearance of more credibility than the usual mob, though the message is the same.

    I pulled up before one of his pieces which contained an embedded tweet criticizing Ardern for jaunting or flitting around the world, while the thrust of his argument was that Nanaia Mahuta didn’t travel enough which was made primarily by ignoring the work she had done, the pandemic and elevating the Australian government to sainthood for its whistlestop tour.

    Which is it- too much jaunting or not enough? And women are the ones who inconsequentially jaunt being the clear subtext too.

    Yes there is a network of right wing attacks that get carried by the press. But there seems to be very little editorial selection or judgement. Balance doesn’t have to be provided by carrying untruths or very selective viewpoints.

    This has been a deal got over the line by Ardern’s personal presence. If it was any of the rw leaders there would be sage nods about negotiating clout, international business experience and so on. What a load of garbage from the right and the press.

  8. newsense 8

    Time to just tax the shit out of the farmers and build some houses, further fund the health system and fix the water and the waterways. They get good deal after good deal after good deal and yet they always complain. They’re guna complain anyway- might as well at least get the full costs of the damage done to the environment by their industry.

    Meanwhile, climate change costs are arriving for coastal property owners and others with flooding and landslips. Soon we’ll see eco-system changes and crops failing where they’ve traditionally grown too…

    The sane process that sees us with Ian Foster, not Scott Robertson seems to be common all over the rural leadership: the old boys over the best available.

  9. Just Saying 9

    Another important thing to remember is that trade with China is now worth $55 billion annually. This is the Bird in the hand.

    The cost to NZ was, IMHO, selling out NZ's geopolitical independence at the most dangerous time since WW2. Troops massing all around Europe; the US in the process of being trounced in its spectacularly irresponsible and cruel proxy war with Russia (at the expense of Ukrainne and its people); Sanctions against Russia so ill thought-out that they have led to nations voluntarily jeopardizing their food and fuel security as well in some cases, as their very economic foundation; And now as a result closing a major supply route in Lithuania Russia for basic supplies for the Russian people, risking nuclear global war.

    Russia will invade if it is not reopened.

    The US empire is crumbling and it seems the West is bent on risking destroying the whole world to push an impossible river. Can the West afford to continue prop up US delusions of grandeur as it careers from dangerous debacle to catastrophic nightmare? Couldn't we insist, for a change, that it grow-up?

    • Populuxe1 9.1

      Funny thing is that China holding our trade relationship over our heads to keep us quiet and obedient is actually a very good reason to diversify our trade relationships with other blocs. I prefer it when we can call out genocidal imperialists without worrying about the paperwork getting mysteriously lost or being badmouthed in the state media.
      Not sure the kleptocratic oligarchs in Moscow are that worried – I'm sure all that stolen Ukrainian wheat will keep them going.

      • Just Saying 9.1.1

        Agree about the importance of diversifying trade.

        I wasn't suggesting trading with EU and China was either\or. The more countries we can trade with the better.

        My problem is a deep disappointment with such sycophantic eagerness to play this game. I don't advocate selling-out NZ's independence for trade, but it is clear if this was part of her agenda, she did a very poor job of this – desperately leaping into what is a very dangerous and unstable brinksmanship before the trade negotiations.

        We need wisdom, maturity and leadership and if there were good reasons for selling us out she needed to be clear about them with this democratic nation. The people she represents. (and preferably before behaving like a star-struck teenager. Again).

        • SPC 9.1.1.1

          Our support for multilateral/collective security of nations is one of longstanding.

          It was an irony Putin was President on the

          The absemnce

        • SPC 9.1.1.2

          Our support for multilateral/collective security of nations is one of longstanding.

          That Russia held the Presidency on the UNSC when Ukraine was attacked does not change that. It does change the vehicle we work with in resisting such criminal action.

          desperately leaping into what is a very dangerous and unstable brinksmanship before the trade negotiations.

          You claim desperation. Why? What's with the before – the trade negotiations have been going on for years. Adhering to longstanding policy on collective security and connecting the dots between rogue action in Europe and the Pacific is what any New Zealand leader would have done.

    • SPC 9.2

      What geo-political independence did we have and how as any of it been lost?

      Lithuania is applying EU sanctions on (rail at first now road as well) transport of oil and refined oil products, any technology that could be used for military purposes, cement, construction materials and metal goods. Russia claims this breaches a 2003 agreement with the EU – it’s alternative is to supply the goods by ship.

  10. Mike the Lefty 10

    A significant proportion of farming and farming business interests believe that only a National government can negotiate good trade deals for them. So when a Labour government does it their instinctive reaction is to pick holes in it. If the same deal had been negotiated with a National government they would have been nodding in satisfaction and saying how great it was.

    • JO 10.1

      yes Those interests always run true to form with hole picking. They'll manage to shred their own arguments if they're not careful.

  11. " And Radio New Zealand should have a deep think about things. Because its description of Ardern’s approach to negotiations as scattering stardust is the sort of misogynistic crap I expect from Mike Hosking and his ilk, not a State broadcaster.

    Where have you been Mr Savage RNZ went blue in 2009 when Joyce infiltrated the board with like minded Key devotees.

    And you know how you tell , everyone gets removed with Kim Hill being the exception and the reporting and negative spin against anything " left " becomes the norm.

    Stardust indeed , at first i thought is was derisory but the longer LINO is in government the more I believe it.

    " There is one further aspect that opponents refuse to acknowledge. Ardern’s standing in the world is such that she is able to gain advantage for New Zealand in a way that I don’t think any previous leader has ever been able to accomplish. This is yet another example of her star power.

    Adern is planning for her inevitable appointment to the UN or some other sympathetic institution.

    Like to see some of that star power applied to the horrors going on at home but domestic politics as Nixon used to find are all puff and no wind and Adern has discovered the adulation of her star power means more to an international audience that the long suffering hobbits in the shire back home.

    Adern turned her back to all that some months back.

  12. Ad 12

    The recent appointment of Nathan Guy to Chair Red Meat New Zealand will give a clue to their outright political bias.

    Fonterra have no one to blame but themselves. Simon Tucker is pissed because Fonterra have pushed all their chips into pumping out generics of regional EU brands. The EU is simply saying fuck off and do your own work and stop copying what we put generations of work into.

    If Fonterra had spent the last 20 years forming its own terroir products and aiming for higher value short run products from specific regional characteristics, they wouldn't be in this high risk state.

    Fonterra's one patent of note in the last five years is a variant of Mozzarella for industrial cheese filling. Fonterra's R&D return barely covers the cost of capital. Pack of dorks.

    • Stuart Munro 12.1

      Kapiti might license them to produce Kahurangi if they ask nicely – expertise is out there – it has merely been ignored by bovine CEOs.

    • " The recent appointment of Nathan Guy to Chair Red Meat New Zealand will give a clue to their outright political bias

      Yes its called institutionalized kiwi " jobs for the boys " corruption.

      Nathan Guy along with the other gangsters of the Key English government continue to secure their own financial future by their activities and favoritism while they were ministers in the shysters government.

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  • Speech to the Criminal Bar Association
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