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New Zealand meat and dairy exporters have expressed disappointment with the free-trade agreement Prime Minister Jacinda Ardern has secured with the EU.
The outcomes for dairy, New Zealand’s biggest export, are “very disappointing and reflect the degree of protectionism which continues to afflict dairy trade globally and particularly among the EU dairy industry,” Fonterra Cooperative Group said in a statement Friday. The Meat Industry Association said the deal will see only a small quota for New Zealand beef into the EU that fell well short of expectations.
Ardern announced the FTA overnight from Brussels, where she and trade minister Damien O’Connor lobbied to get an agreement over the line four years after negotiations started. They hailed it as a major achievement that will unlock New Zealand access to one of the world’s biggest and most lucrative markets.
“It’s a strategically important and economically beneficial deal that comes at a crucial time in our export-led Covid-19 recovery,” Ardern said. “It delivers tangible gains for exporters into a restrictive agricultural market.”
Under the FTA, New Zealand export revenue to the EU is estimated to grow by up to NZ$1.8bn (R18.3bn) annually by 2035.
It will secure 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. Exporters will save about NZ$110m (R1.1bn) per annum on tariff elimination.
The kiwifruit, wine, mānuka honey and seafood industries appear to be winners, with immediate tariff elimination for those goods.
But the meat association said the deal will allow a quota of just 10,000 tonnes of New Zealand beef into a market that consumes 6.5-million tonnes annually.
Dairy giant Fonterra said that while the FTA will provide some small pockets of access for certain products over time, “overall commercial opportunities for products such as butter, cheese, milk powder and key proteins are constrained relative to the size of the EU market.”
O’Connor said the government “fought hard for our dairy and beef exporters” and the deal could deliver them up to NZ$600m in additional, annual export revenue once the agreement is fully in effect.
“We have also secured improved access for our butter and cheese producers, some of which will now be able to be trade with the EU for the first time in many years,” he said.
However, the New Zealand Specialist Cheesemakers Association said the country “has bowed to EU pressure” and given way on key cheese names.
Of particular concern was the loss of the name Feta, which will be phased out over nine years, said board member Daniel Shields. Europe has also succeeded in including the right to restrict new names at a future date, he said.
It is unclear when the FTA will come into force. Both parties must complete domestic legal processes and ratify the agreement, which could take several years.
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.