Cutting back WTO Tariff Rate Quotas post-Brexit is Unjustified

23 April 2019
Joint statement – NZ Food and Beverage Exporters

In light of the latest extension to the Article 50 Brexit deadline, organisations representing New Zealand’s largest food and beverage exporters are highlighting the need for the EU and UK to use this time to work constructively with trade partners to avoid the unwarranted cutbacks of their WTO tariff rate quotas and legally binding WTO commitments.

The EU and UK have argued that cutbacks to their WTO tariff rate quotas (TRQs) are necessary in order to facilitate the UK’s exit from the EU. The terminology used by the EU/UK – “apportionment”- sounds mild but hides the harsh reality that they are undermining the quality and quantity of the EU/UK access commitments and seriously disadvantaging third country exporters. Without this quota access, many third country exporters would be shut out of the EU/UK markets due to prohibitively high tariffs.

In some cases, this “apportionment” would completely do away with all current quota access into the UK or cut back access by 95% – 99.9%. The figures are just as alarming for the EU side which would see reduced quota access into its market ranging from 11% to 100%.

The EU and UK commitments are clearly set out at the WTO and there is no need for these to change, Brexit notwithstanding.  There are wider ramifications from a precedent being established by the EU and UK actions which adversely affects WTO members and erodes current levels of liberalisation.

Further, it seems the EU and UK are inconsistent by adopting one rule in the case of their multilateral trade commitments and a completely different one for their bilateral trade commitments.  With some current EU bilateral FTA partners, the entirety of their quota access into the EU seems to have been preserved and additional, separate, quotas created for access into the UK post-Brexit.

This different treatment creates major problems.

The WTO is an essential foundation of the rules-based trade architecture. It has strengthened trading partnerships and provides a level playing field for all economies alike. New Zealand food and beverage exporters hold significant concerns about the future of the multilateral trading system if apparently committed multilateralists like the EU and UK would want to walk back on liberalisation commitments and further disadvantage their trade partners through their approach to Brexit. This is a grim prospect for a small trading economy like New Zealand. 

At a time of increased protectionism, the loss of enforceable rules would mean the loss of predictable access to international markets. We all have a lot to lose if countries opt to backslide from their commitments, without regard for the consequences. 

We encourage the EU and UK to use the opportunity provided by the extension to the Brexit deadline to change their approach. There are ways to resolve this matter in a mutually acceptable manner. But this requires open minds and a constructive dialogue to find solutions that properly honour existing WTO commitments and avoid wholesale re-negotiation of those commitments, for which trade partners would need to be compensated. 

As organisations representing the majority of New Zealand’s primary sector exported goods, we fully support Prime Minister Jacinda Ardern, along with Trade and Economic Growth Minister, Hon. David Parker, and officials, in working with the EU and UK, and with other like-minded countries to find a way to make sure New Zealand exporters are no worse off as a result of Brexit.