No ‘dirty deal’ done

Rural News (Oct 24) quoted James Parsons, the chair of Beef + Lamb NZ, as saying that the two (EU and UK) had decided that after Brexit 45% of NZ’s tariff rate quota (TRQ) of 228,000 tonnes of lamb and mutton would go to the UK and the balance to the EU.

Parsons was annoyed that a deal had seemingly been done without consulting NZ.

The quotas come under the jurisdiction of the World Trade Organisation (WTO) in Geneva. Under the present arrangement NZ has the flexibility to sell that 228,000 tonnes anywhere within the EU, but when Britain leaves a deal has to done to split this in some way between the EU and UK.

But Bernard Savage, who heads the EU delegation in NZ, told Rural News that no percentage split of the quota has been decided. All that’s been agreed to is a way to split the quota and how this is done will be up to members of the WTO – including NZ – to decide.

Savage says this was never intended to be a fait accompli, but rather the starting point for negotiations. He says it’s up to the WTO to decide whether a split will be based on historical trade flows and over what period.

“The important thing to understand is that overall market access across these different quotas will remain the same and we will respect the historic commitments to the WTO,” he adds. “The issue of TRQs could not be discussed before it went to the WTO; that is the right place for this to happen. It is simply not feasible to do this beforehand, given the number of products and the number of holders of TRQs.”

Savage says the EU and the UK will honour the underlying principles of the WTO and ensure that NZ retains the same level of market access as it has had historically.

However, he stopped short of saying that NZ could have the same flexibility it has at present. While NZ will be able to move any quota around the 27 EU nations, this will not extend to Britain and this is a sore point with the local meat industry. They point out this inflexibility could prove detrimental to the EU, UK and NZ.

Savage describes this as a “technical” matter that strikes at the heart of the fundamental principles of the European Union and the concept of a single market. He adds that it is likely one of the consequences of Brexit.

“The integrity of the single market is something we are not prepared to discuss; that is an internal matter and will be defended by the 27 members of the EU,” he says.

The challenge now for NZ is to somehow extract some sort of deal via the WTO, but it would appear that by leaving the EU, Britain has removed the option of flexibility from the UK/EU sheepmeat market. This deal has served NZ well for many years.

Other unknowns in this will be how Irish and British sheep producers will react and deal with the idea of a rigid quota in the UK if the market becomes depressed. It could be that the sheepmeat ructions of the 1970s and 80s may resurface. Also in the mix is what access arrangement, and on what terms, NZ may be able to negotiate in the pending FTA with the EU in the coming months.