All Eyes On PM’s Visit to Brussels

Senior Officials have been camped in Europe for weeks and Minister O’Connor has stayed on after the WTO Ministerial to be in Brussels.  Does this mean that the PM will be able to reach “agreement in principle” in the NZ EU FTA negotiation when she visits Brussels next week?

There are concerns in some circles that the political pressure is on for an agreement, even though the outcome for some sectors may not be as good as the sector was hoping for.  Dairy and beef are mentioned as sectors still needing further work. The dairy industry is also watching the geographical indications element of the negotiation closely.  Will we still be able to buy New Zealand-made parmesan cheese after this Agreement?

Other elements of the intellectual property chapter will be of interest to the pharmaceutical, book and film industries.

A final agreement is not going to be possible as the EU is seeking a new mandate from members on a sustainability chapter.  Negotiations with New Zealand on this Chapter cannot happen without this mandate.  It is still unclear when this mandate will be finalised. “Agreement in principle” on everything else is possible.

Also unclear is the impact of the interesting French legislative election result. This should not really affect the negotiations completed to date as everything on the table falls within EU competency and does not need to be ratified member state by member state.  But this could impact the sustainability chapter.

The EU Trade and Sustainable Development Chapter came out overnight 23 June New Zealand time – details can be found here

WTO Outcome Surprises Some

Many were predicting a complete failure of the WTO Ministerial meeting held this month in Geneva.  The good news is that an outcome was achieved on some issues.  It is good to see that agreement has been possible on contentious issues such as vaccine patents and fisheries subsidies.  As there is a global glut of vaccines, the former is probably of more symbolic nature in the short term anyway.  The fish subsidy agreement has been many years in the making and is very much a New Zealand led initiative.  In the current challenging global environment any progress on these issues is to be welcomed.

Here are three that are top of mind for ExportNZ:

1. ExportNZ was concerned about the potential expiration of a moratorium on tariffs on e-Transmissions. This moratorium had been in place since 1998 but has been under threat with a number of developing countries signalling they are wanting to impose tariffs on e-transmissions (a significant change as the early introduction of the moratorium has meant there have never been tariffs imposed on e-transmissions). At the end of negotiations, the moratorium was renewed until 31 March 2024 at the latest which will be a relief to not only digital businesses, but non-digital businesses. “e-transmissions” is an extremely broad term that can encompass anything from digital media files to bank transactions, to emails.

   ExportNZ & BusinessNZ represent New Zealand in a group of industry representatives called the Global Services Coalition, which advocates on issues for the services sector worldwide.

2. WTO members reaffirmed the principles of the WTO and committed to an open and inclusive process to reform its functions. They also committed to working towards having a functioning dispute settlement system by 2024. This is a significant move internally, as the appellate body has not been active since 2020 when the US refused to appoint new judges.

   As a small trading nation, New Zealand relies on the WTO appeals mechanism to ensure there are options to engage when other nations violate WTO rules, so its return will be greatly appreciated.

3. After two decades of negotiations, the WTO has clinched a new agreement on fisheries subsidies. While the deal is a watered-down version of a broader draft agreement, it will still include a set of rules prohibiting subsidies to illegal, unreported, and unregulated (IUU) fishing, the fishing of overfished stocks, and to fishing on the high seas outside the control of regional fisheries management organisations.

New Zealand has long advocated for an end to IUU fisheries subsidies as New Zealand does not offer harmful subsidies. This agreement is supported by ExportNZ as they currently provide unfair advantages to overseas competitors, and is good news for fishing stocks and the sustainability of marine resources.

Regarding fishing subsidies, here is a useful story from 2018 discussing the inclusion of clauses prohibiting IUU subsidies in the CPTPP deal.

UK-NZ Free Trade Agreement

The legislation bill for the UK-NZ FTA was introduced into the House on the 22 June. Once passed, it will allow New Zealand to implement its obligations under the FTA and is the next step to bringing the Agreement into force.

The Bill will align New Zealand’s domestic law with obligations in the FTA, including amendments to the Tariff Act 1988, the Tariff, the Customs and Excise Regulations 1996, the Dairy Industry Restructuring Act 2001, the Overseas Investment Act 2005, the Overseas Investment Regulations 2005, and the Copyright Act 1994. The Bill also creates new regime required to administer a transitional apple export quota.

The UK will need to complete a similar process in its own parliament, the aim is still for the FTA to enter into force by the end of 2022.

CPTPP

The PM received a pretty clear message that US membership of CPTPP is not going to be happening anytime soon when talking to President Biden.

Interest in expansion of the agreement remains strong from others. But even the UK accession process is going slowly.

Indo-Pacific Economic Framework (IPEF)

Some commentators are getting excited about the US led Indo Pacific Economic Framework.

Detail about what will be included in this agreement is still being debated.  One thing is clear – it will not involve tariff liberalisation.

As MFAT has said clearly, this is not a Free Trade Agreement.

Membership includes the US, Australia, New Zealand, Japan, Singapore, ROK, India, Thailand, Vietnam, Indonesia, Malaysia, Brunei, the Philippines and Fiji.

ExportNZ recently submitted its support for New Zealand’s participation in IPEF to the Ministry of Foreign Affairs & Trade.

While ExportNZ expressed its disappointment that the deal would not include new market access deals into the US or lower tariff rates for exporters. We believe there are sufficient opportunities available to expand New Zealand’s trading relationship with the US to warrant New Zealand’s inclusion.

These include coordination on global supply chain resilience, opportunities to engage IPEF members on a digital trade window and paperless trade, and to continue New Zealand’s advocacy for free trade.

There is plenty of work still to be done to define what IPEF will actually be so it will be interesting to follow its development.

You can access the ExportNZ submission here.

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