The dairy industry saw the deal as a missed opportunity. Photo/Mark Mitchell
A flurry of supportive press releases followed the government’s free trade agreement with the European Union last week.
While the wine, kiwi and seafood sectors all had reason to cheer, others weren’t quite as enamored with what they saw.
“It’s a deal that removes tariffs and quotas for many New Zealand exports to the EU, with the very large exception of our meat and dairy sector,” said Liam Dann, editor. chief of the NZ Herald and host of Money Talks, on the Front Page podcast. .
The exclusion of these two basic agricultural sectors has become a central point of discussion between those who like the agreement and those who don’t.
“It makes it a bit of a culture shock,” says Dann.
“What you have here is an ideological clash with those who think we should have pulled out of the deal because dairy and meat are the backbone of our economy.
“What happened here was that the government admitted that we were never going to do good business on dairy and meat in Europe for the foreseeable future. They decided not to let these go. other benefits, so they pushed dairy and meat to one side, which has never happened before.”
European nations already have strong dairy and meat operations within their own borders, so any deal granted to New Zealand would have simply increased competition for local producers.
“Europe has been fiercely protective, France famously, of their dairy and meat sectors. Milk, in particular, is such a hot potato that there was very little chance of getting a deal there. .
“Some National Party members and traders said we missed an opportunity there, but that’s a bit like saying New Zealand missed an opportunity to win the FIFA World Cup. We would have maybe beat Costa Rica, but we were never going to win.” the soccer World Cup… We were never going to have access to dairy in Europe, so we had to make a call.”
There are those in the business community who are not happy that the government has not pushed harder to bring dairy and meat into the mix.
“Stephen Jacobi of the New Zealand International Business Forum is not happy with this, which is a blow to the government as he is generally a strong supporter of all trade deals,” Dann says.
Dann says Jacobi would have liked to see the government toe the line on trade agreements to ensure free and open access rather than dividing them up in this way.
The government has taken the pragmatic approach here focusing on getting what it can across the line – and in the process has also sent a signal that New Zealand’s economy is changing rapidly .
“It sends a signal that we can’t continue to rely on meat and dairy to grow,” Dann says.
“There’s a limit to the number of cows we’re going to have in this country, so it’s a step in a different direction.”
But the benefits of this trade deal will not come overnight.
“Without meat and dairy, it’s not an economically meaningful deal in the short term. Some people say these are optimistic government estimates, but it’s talking about a 1.8% increase in exports to Europe. billion dollars per year by 2035.
“It’s like a rounding error on how much dairy we sell each year… So this deal is not transformational in that sense, but it sends the message to other exporters that tariffs and barriers that made doing business in Europe difficult have been removed.”
Ultimately, the success of this deal will be determined by the ability of Kiwi businesses – beyond meat and dairy – to penetrate the European market over the next decade.
The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am.
• You can follow the podcast on nzherald.co.nz, iHeartRadio, Apple Podcasts, Spotify or wherever you get your podcasts.