Trade update – December
As this update is being written New Zealand and EU negotiators are beginning their latest round of discussions on a bilateral FTA. Unfortunately, the market access teams will not be meeting as the EU has been unable to improve the unacceptable position currently on the table. As market access is one of the most contentious aspects of this negotiation the failure to discuss market access is not a good sign.
Another contentious issue is the EU demands on geographic indications (GIs). MFAT consulted on the list of proposed products that would be protected under the FTA in 2018. A new consultation is underway on the EU’s proposed text for the GI Chapter. This proposes significant changes to New Zealand law. This consultation document can be found on the MFAT website.
As we predicted the China-NZ FTA Upgrade Agreement was signed last month. The upgrade includes improvements in access for New Zealand forest products exports, customs and quarantine facilitation and services improvements. Some of these bring the China FTA services commitments closer to the services commitments in newer agreements e.g. on ground handling and specialty air services and on environmental services. There are new Chapters on Electronic Commerce, Environment and Trade, Competition Policy and Government Procurement.
There have been adjustments to the visa allocations for “iconic occupations” under the Agreement. Chinese speaking Tour guides increase from 100 to 200 places. Mandarin teachers increase from 150 to 300.
All up the Upgrade represents useful forward movement and negotiators can be proud of this outcome.
The RCEP negotiation was also concluded last month but carelessly the negotiators lost one of the members – India. As India was the only RCEP member with whom New Zealand does not already have a FTA this loss of India greatly diminishes the value of this agreement for New Zealand.
We understand that Japan is working hard to try and get the Indian Government to reconsider its position.
The agreement reached in November is a bit curious. It only relates to the text of the agreement. Market access commitments are still being negotiated. These may still take a few months to finalise – even without India in the room.
In another setback for New Zealand exporters both Houses of Japan’s Diet have approved the limited trade deal struck with the US. This will see US meat and some other agriculture products treated in the same way as CPTPP members – such as New Zealand. This may see the US regain some of the market share that New Zealand had been taking from it since CPTPP came into force.
The Japan-US deal is probably inconsistent with WTO rules, but no members seem to be rushing to challenge it.
There is no more positive news on CPTPP. There are no new prospective members and four existing members – Chile, Peru, Malaysia and Brunei have yet to ratify the Agreement. Chile’s domestic challenges are making early ratification difficult.
There is some talk of a revival of the FTA negotiation with the GCC. We are highly skeptical.
Brexit and UK-NZ
With a resounding electoral majority PM Boris Johnson will now be able to ‘get Brexit done’ and leave the EU by the end of January. That is probably the easy bit, but what the replacement relationship will be will be harder to hammer out and of course it takes two to tango – the EU will have its own bottom lines. So it is still too early to tell if it will be a hard Brexit for the UK or a softer transition will be possible, but either way, trade deals take time to get agreement on, so there is still a lot of water to go under the bridge.
New Zealand can’t start on trade talks with the UK until they are out of the EU, so continue to watch this space.
We have given up making predictions on the US-China trade agreement. Right now the mood seems positive but this can shift quickly.
Again, as we write, all eyes are on the WTO where the Dispute Settlement’s Appellate Body may be about to cease to function if the US does not agree to replacement judges being appointed or terms for existing judges extended. We will report on implications should the US continue to play hardball.
The Trade For All Panel released their report and I understand that negotiations have been concluded on the Digital Economic Partnership Agreement between Singapore, Chile and New Zealand. This was going to be announced at the APEC Summit that was cancelled. A new timing and venue is being worked on. Good progress is also being achieved in preparing for the launch of the negotiations on the Agreement on Climate Change, Trade and Sustainability – involving Norway, Iceland, Fiji and Costa Rica. Negotiations are expected to begin in the first quarter of 2020.