China No Longer Just A Commodity Story - Luxon
China remains New Zealand’s biggest market, taking $23 billion of our exports, but it’s no longer a commodity story, says Prime Minister Christopher Luxon.
Prime Minister Jacinda Ardern’s claim, made after her much-hyped European visit earlier this year, that a completed free trade agreement (FTA) with the European Union (EU) by the end of this year was on the cards, is proving to be as hollow as most political promises.
Any proper analysis of the PM’s assertion at the time would have shown that her enthusiasm for such a deal was always more rhetoric than reality. It is clear that agriculture remains a sensitive issue and the recent visit to New Zealand by European Commissioner for Agriculture and Rural Development Phil Hogan has only highlighted this fact.
For one, the Brexit melee has identified a major issue over tariff rate quotas (TRQs) for our sheepmeat, beef and dairy products sent to the EU.
NZ has strongly rejected the EU and UK government’s proposal that upon Brexit the TRQs be split in half. As trade expert Stephen Jacobi points out, this poses huge difficulties for NZ exporters who manage, according to market trends and consumption patterns, flows of their products to the EU and to Britain.
However, both the EU and the UK have ignored NZ’s concerns – and the objections of other trading partners with similar arrangements – and now risk years of trade litigation at the WTO. This is hardly the sign of a trade partner willing to compromise.
Another issue underlined by Hogan’s visit is that the EU’s proposed restrictions on the use of geographical names – or geographic indicators (GIs) – on products will also have implications for NZ exports to other regions, including China.
As part of negotiations for the FTA the EU wants NZ to abide by strict regulations on the way certain geographical names are used in international trade. This new strict regime would not only apply to products marketed in NZ, but also to our exports to other markets: think of feta cheese, mozzarella, parmesan, even cheddar. NZ’s view is that these names have become generic rather than relating to a certain geographic region.
As Jacobi points out, Fonterra now supplies large amounts of mozzarella cheese to China: every second pizza in China is covered with it. That’s a lot of pizza and a lot of cheese.
It seems Ardern’s fanciful FTA claim is now hitting reality. If she or anyone believes a comprehensive FTA, including agriculture, with the EU will be completed by the end of this year, then we have a porcine aerodrome we can sell her.
