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'Culture clash': Did Govt mess up by omitting dairy, meat from EU free trade deal?

Author
Damien Venuto, NZ Herald,
Publish Date
Tue, 5 Jul 2022, 12:46pm
Photo / NZ Herald
Photo / NZ Herald

'Culture clash': Did Govt mess up by omitting dairy, meat from EU free trade deal?

Author
Damien Venuto, NZ Herald,
Publish Date
Tue, 5 Jul 2022, 12:46pm

A flurry of supportive press releases followed the Government's free trade agreement with European Union last week.

While the wine, kiwifruit and seafood sectors all had reason to celebrate, others weren't quite as enamoured with what they saw.

"It's a deal that removes tariffs and quotas for a lot of New Zealand exports in the EU, with the very big exception of our meat and dairy sector," NZ Herald business editor at large and Money Talks host Liam Dann tells the Front Page podcast.

The exclusion of these two core farming sectors has become a central point of discussion between those who like the deal and those who don't.

"It makes it a bit of a culture clash," says Dann.

"What you have here is an ideological clash with those who feel we should have walked away from the deal because dairy and meat are so central to our economy.

"What's happened here is that the Government has conceded that we were never going to get a good deal on dairy and meat into Europe for the foreseeable future. They decided not to let these other benefits go, so they've pushed dairy and meat to one side, which hasn't happened before."

European nations already have strong dairy and meat operations within their own borders, so any deal afforded to New Zealand would have simply increased competition for local producers.

"Europe has been fiercely protective, France famously so, of their dairy and meat sectors. Dairy, in particular, is such a hot potato that there was very little chance of getting a deal there.

"Some National Party and trade people have said that we've missed an opportunity there, but that's a bit like saying New Zealand missed the opportunity to win the Football World Cup. We might have beaten Costa Rica, but we were never going to win the Football World Cup… We were never going to get access for dairy in Europe so we had to make a call."

There are some in the business community who are not happy that the Government didn't push harder to get dairy and meat into the mix.

"Stephen Jacobi of the New Zealand International Business Forum is not happy with this, which is a blow for the Government because he's usually a huge supporter of all trade deals," says Dann.

Dann says that Jacobi would have liked to see the Government holding the line on trade deals to ensure free and open access rather than having them split in this way.

The Government has taken the pragmatic approach here by focusing on getting what it can across the line – and in the process has also sent a signal about the fact that New Zealand's economy is changing rapidly.

"This sends the signal that we can't keep relying on meat and dairy to grow," says Dann.

"There's a limit to how many cows we're going to get in this country, so this is a step in a different direction."

Prime Minister Jacinda Ardern and European Commission President Ursula von der Leyen signed a policing agreement ahead of announcing a trade agreement. Photo / Thomas Coughlan

Prime Minister Jacinda Ardern and European Commission President Ursula von der Leyen signed a policing agreement ahead of announcing a trade agreement. Photo / Thomas Coughlan

But the benefits of this trade deal won't come overnight.

"Without meat and dairy, this is not an economically significant deal in the short term. Some people are saying these are optimistic estimates by the Government, but there's talk of growing exports to Europe by $1.8 billion a year by 2035.

"That's like a rounding error on the amount of dairy we sell every year… So this deal is not transformational in that sense, but it does send the message to other exporters that the tariffs and barriers that made business in Europe hard have been removed."

Ultimately, the success of this deal will be determined by the ability of Kiwi companies - beyond meat and dairy - to crack into the European market in the coming decade.

The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am.

You can follow the podcast at nzherald.co.nziHeartRadioApple PodcastsSpotify, or wherever you get your podcasts.