New Zealand continues push to protect post-Brexit trade quotas

The Government is leaving no stone unturned to protect New Zealand’s quota access into the EU and the UK post-Brexit, Minister of Trade and Export Growth David Parker said.   

Prime Minister Jacinda Ardern raised the issue with UK Prime Minister Theresa May and with EU leaders during her meetings in London and Brussels last week. 

Other ministers and our officials have raised this matter at every opportunity with EU and UK leaders since the issue first emerged in late 2017. 

It will also be discussed with EU Agriculture Commissioner Phil Hogan when he visits New Zealand soon. 

“We are working hard to hold them to the assurances they have given us that New Zealand will not be left worse off as a result of Brexit,” David Parker said. 

Tariff rate quotas (TRQs) set the amount of New Zealand goods, such as sheep meat and butter, that we can export into the EU at a lower tariff. At issue is how the EU and the UK will set the TRQs when the UK splits from the EU. 

Speculation about the proposals the EU and the UK were developing to split TRQs in a way that would reduce access for countries including New Zealand first arose in late 2017.   

New Zealand with six other concerned WTO Members wrote formally to the EU and the UK in September 2017 outlining the reasons why this approach was unacceptable. 

“We have and will continue to fight this proposal and encourage the EU and the UK to re-think their approach.  It’s important we find a mutually acceptable solution that will not leave our exporters disadvantaged.” David Parker said. 

Last July New Zealand lodged a formal objection to these proposals as part of the EU consultation process as it formulated the regulation passed last week by the EU Parliament.  

Those proposals and the submission lodged by New Zealand and other concerned WTO Members can be found at: https://ec.europa.eu/info/law/better-regulation/initiatives/com-2018-312_en. 

In October, along with a large number of other WTO Members, New Zealand lodged a claim of interest at the WTO in Geneva to defend our existing quota access.   

“At the same time, we lodged an objection to the UK’s proposal for similar cut backs to its WTO quota commitments.  Again a large number of WTO Members did likewise,” David Parker said. 

“We have also been active in raising these concerns in the relevant WTO bodies.” 

David Parker said it is particularly disappointing at this time of rising trade tensions to see partners who are usually defenders of the multilateral rules based trading system, acting unilaterally in a way that undermines the binding commitments for quota access that other WTO Members have negotiated hard and in good faith for in previous decades. 

“Nevertheless, the Government is committed to working with the EU and the UK to resolve these issues in a mutually satisfactory manner.   

“This is our priority Brexit trade issue and we have not ruled out any options for pursuing an outcome that makes sure our exporters are no worse off.” 

Background Information 

  • In July last year, the EU tabled a formal proposal in the WTO to launch negotiations with concerned WTO Members over these proposed cuts.  In January this year, the EU parliament adopted domestic regulation to implement these proposed cuts unilaterally.  These proposals, together with the submissions lodged by concerned WTO members, can be found at https://ec.europa.eu/info/law/better-regulation/initiatives/com-2018-312_en. 
  • On December 21 last year, the UK circulated its own formal proposal in the WTO to launch negotiations over its proposed cuts in tariff rate quota commitments. 
  • The effect of these proposals would be to completely eliminate current WTO quotas into the EU for 5 products (or 3% of current EU quotas) and to reduce access by more than 10% for 95 products (or 49% of current EU quotas). 
  • In the case of the UK, these proposals would fully eliminate current WTO quota access into the UK for 55 products (or 29% of current EU quotas). 
  • For beef, these proposals would see the EU reduce access into its market under certain quotas by up to 69%; for pork, certain quotas would see reductions of up to 64%; for its sheep meat quotas the cuts into the EU market range from 11% to 80%; for chicken, up to 35%; for certain wheat, sausages and some fish quotas, the cuts would be in excess of 90%; while the proposed reductions for dairy products like butter and cheese range from 0% to 100%. 
  • This issue is of particular concern for those countries without preferential access into the EU through a Free Trade Agreement.  These countries – like New Zealand, the US, Australia, Brazil, Argentina, China, India – are reliant on the access conditions negotiated and bound in the WTO.  The tariff rate quotas are particularly important in that regard because the EU’s tariffs for the majority of these products are too high to be able to trade into that market ordinarily. 
  • New Zealand has been clear from the outset with both the EU and the UK that these proposals will leave concerned WTO Members, like New Zealand, worse off.  At present, other WTO members are able to export up to the full volume of these quotas into any part of the EU and trade over the life of the quotas has reflected this.  Most products have seen considerable variation in the proportions of trade going to either the UK or to other EU Member States in response to fluctuations in demand.