EU courting us to get ahead of UK in a post-Brexit Free Trade deal

European Union Ambassador to New Zealand Bernard Savage talks to Otago Daily Times senior business reporter Simon Hartley about free-trade agreement negotiations.

“We started New Zealand scoping before Brexit began,” [Bernard Savage] said.

While being in a race with the UK “was not a consideration”, although Mr Savage hoped formal talks would begin in the new year and “can be completed as quickly as possible”.

He said a “key” element to the talks would be the services sector, which includes technology, tourism, law, education, financial services and accounting, with a strong emphasis on deals beneficial to New Zealand small to medium enterprises (SMEs).

“The free-trade agreement [with New Zealand] will stand or fall on the benefits to the small to medium enterprises … the big companies are already experienced in these deals for decades; some more than 100 years,” he said.

“It’s important we and New Zealand identify that now and know what obstacles may be in the way,” he said of export issues the SMEs may face.

While the European Union is our third largest trading partner for exports, it is the top trading partner for imports for the year to June 2016, with imports topping more than $12 billion.

Mr Savage said he had neither a dollar nor percentage increase in mind for the future.
The UK takes about 35% of New Zealand’s exports; rising to 44% when services are taken into account, with the balance of trade across the 28 member countries of the EU.

Mr Savage’s impression of meeting several tech start-up companies in Dunedin was positive – he noted not only that staff were represented by several nationalities but their potential market for their gaming platforms was global.

“Increasing trade for New Zealand and EU is not about the old-fashioned idea of goods on ships, but opening up the global value chain … identifying those businesses which are able to add value,” he said.

As an example of identifying different links in the global production chain, Mr Savage talked about New Zealand merino wool going to China for scouring, then to Italy for manufacturing.

He said the same New Zealand company was now looking at using less fine wool in an attempt to replace environmentally destructive microbeads, with a biodegradable product.

Examples of the expansion of the global value chain was Fonterra having purchased one of Latvia’s biggest dairy companies, and a Fonterra dairy manufacturing company in the Netherlands was exporting to New Zealand.

Kiwifruit producer Zespri had also bought Italian companies and was now directly supplying EU markets, he said.

Asked about the strengths the EU could bring to negotiations, Mr Savage simply said the bloc was the world’s biggest single market, with plenty of opportunities opening up.

While having an emphasis on the service sector, Mr Savage was not downplaying the importance of historical trades such as the sheep and beef trade.

However, he sounded a note of caution about the agriculture sector, arguably the most contentious as New Zealand and European farmers strive to maintain their respective market shares

“There will be [deal] criticisms from both sides of the agricultural sector … disappointments on both sides,” he said.

“[Ultimately] there has got to be increased market access for both sides,” Mr Savage said.

Also for the agricultural sector there were tariff rates to be considered, but until negotiations started Mr Savage could only say they would be “folded into the discussions”.

“Ultimately, we want to make sure everyone’s market access increases,” he said.

Another issue Mr Savage tackled was the transparency of negotiations, as citizens worldwide become increasingly disenchanted with trade deals being struck in secrecy.

“A key issue has got to be transparency – to be honest, that’s not been done so well in the past,” he said.

He said the EU and New Zealand were “on the same side of the table”, when it came to climate change, environmental sustainability, human rights and research and innovation.

That was underpinned by having worked closely together in the past on security matters, maritime law and New Zealand’s past role on the Security Council.

He joked that if New Zealand were closer to Europe geographically “it would be eligible for EU candidacy … we’re like-minded and share many objectives,” Mr Savage said.

“The proof will be in the pudding; to broaden the spectrum of goods and sustainable jobs for everyone,” he said.

Hands up those of you who already knew we have a European Union Ambassador in New Zealand?



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