While the UK cycles through prime ministers and English and Welsh farmers grumble about a flood of cheap imports, the formal approval of New Zealand's FTA with the country is moving slowly but surely ahead
Criticism from British MPs and ongoing political chaos in the United Kingdom appear unlikely to knock the UK-New Zealand trade agreement off course, with the formal ratification process now underway at Westminster.
While the FTA was signed in February this year, it is yet to come into effect with both countries needing to pass enabling legislation into law.
In a report released last week, the British parliament’s international trade committee recommended “on balance” that the New Zealand agreement be ratified – although not without some caveats.
The committee offered praise for the deal’s environmental provisions, which went further than those in the UK-Australia agreement, but questioned whether the British government had fully weighed the benefits and costs of eliminating most of its tariffs for New Zealand’s goods.
While roughly two-thirds of New Zealand’s dairy produce exports currently went to Asia-Pacific countries, some in Britain were concerned the removal of tariffs could mean “a significant amount of agri-food exports from New Zealand are diverted to the UK market in the future”, undermining the domestic industry.
“We recognise that New Zealand agri-food imports, which may be cheaper than UK produce, may benefit consumers, particularly during the cost of living crisis, and that the relatively low carbon intensity of New Zealand’s production methods may be beneficial to the environment.
“However, we are concerned that the Government has not adequately considered the longer-term food security risks that the agreement may present.”
In contrast to the opportunities for Kiwi exporters, there were relatively few export opportunities for the British agriculture sector given the small size and self-sufficiency of the New Zealand market.
“We are running the risk of locking our beef, sheep-meat and dairy producers into a contest they never sought without support or protection, with competitors able to place them at a serious disadvantage, and at a time of immense challenge for consumers and businesses.” – Angus MacNeil, British international trade committee chairman
The committee’s report contrasted the UK’s deal with “the slower approach that the EU has negotiated with New Zealand”, saying the Government had to explain why it had liberalised tariffs so quickly.
Committee chairman and Scottish National Party MP Angus MacNeil said the deal had caused “understandable disquiet” among British producers, given the potential impact of an influx of cheaper imports.
While the FTA might provide cheaper food for consumers, MacNeil argued it was also a potential threat to the UK’s food security during a cost of living crisis.
“We are running the risk of locking our beef, sheep-meat and dairy producers into a contest they never sought without support or protection, with competitors able to place them at a serious disadvantage, and at a time of immense challenge for consumers and businesses.”
Sir Lockwood Smith, a former trade minister and New Zealand high commissioner to the UK, told Newsroom it was unsurprising there was some concern within the country about the impact of post-Brexit trade agreements.
“It's a new development for the UK when you think about it: 40 years under the protectionism of the EU, and they've emerged from that, so it's a significant change for the agricultural sector.”
While the lower production costs associated with New Zealand products would create strong competition, Smith said the transitional periods in the FTA would give British farmers time to adjust to those challenges.
The significantly lower emissions intensity of New Zealand beef, lamb and dairy production compared to the UK had helped to assuage concerns about a potential increase in emissions from shipping produce to the other side of the world.
CPTPP 'the big prize' for UK
New Zealand’s deal with the UK was “a hundredfold better” than the agreement it had managed to negotiate with the European Union, Smith said, with the sharp disparity in the scope of tariff cuts and trade liberalisation driving some resentment from British politicians and businesses. However, the purpose of the FTA with New Zealand went beyond the benefits of that deal itself.
“The big prize post-Brexit is the UK joining the CPTPP, bringing Asia to the doorstep of Europe, getting involved in the most rapidly growing parts of the global economy…and it wouldn't get there if it hadn't been able to demonstrate it was prepared to open its markets to countries like Australia and New Zealand who could meet their standards. And so it's all part of a wider strategy.”
The UK’s move to its third prime minister this year has added further complexity to the ratification process.
New British leader Rishi Sunak criticised the UK-Australia free trade deal as being bad for British farmers during his first campaign for the leadership earlier this year - but said he would not back out of the agreement.
“We can’t rip up treaties that we’ve already signed in this country … We should take the time to get them right and we should make sure that they work for British farmers.”
Smith said he did not know Sunak as well as Johnson and Truss, who had both been strong supporters of the need for the UK to open up to global trade. In turn, Sunak did not know New Zealand as well as his predecessors, although that was unlikely to affect the British system’s use of Kiwi trade experts.
“I'm the only non-British person serving on their trade and agriculture commission, and I think part of the reason why they wanted me there was to tap into New Zealand's experience in what happens when you negotiate free trade agreements.
“Of course, their chief negotiator in the United Kingdom is a New Zealander – Crawford Falconer, one of our former top trade negotiators, former ambassador to the WTO and so…they've tapped into New Zealand's expertise quite significantly and I don't think the recent changes will change that.”
On October 25 (the same day Sunak was sworn in as prime minister) British international trade secretary Kemi Badenoch told MPs the pre-ratification process for the New Zealand FTA would formally begin on October 27.
The UK’s processes give Parliament 21 sitting days to consider whether to delay or move ahead with the deal’s ratification. However, a separate piece of legislation, the Trade (Australia and New Zealand) Bill, must also be passed into British law before the FTA can take effect; that bill is in its final stages, having recently gone through the committee stage.
While Australian prime minister Anthony Albanese said he was concerned about a delay to his country’s trade deal with the UK, New Zealand politicians have professed themselves to be unworried by the potential disruption.
Deputy Prime Minister Grant Robertson last week described Sunak as “a good friend of New Zealand” and a supporter of the FTA, while Trade and Export Growth Minister Damien O’Connor was likewise quick to downplay the suggestion of any new obstacles.
“We're not concerned at all, we’ve reassurances that the process will continue. I have to say, I've appreciated Liz Truss’s commitment to this right from the start and the Conservative government's determination to get out, reconnect with the world and do trade agreements,” O’Connor said.
