Mr English goes to Europe

This post was prepared by Stephen Jacobi, Executive Director of the NZ International Business Forum. 

There was a time when a pilgrimage to the great capitals of Europe was mandatory requirement for incoming Prime Ministers. When Britain joined the European Community in 1973, New Zealand was on the back foot seeking continued access for butter and sheepmeat.

After decades of effort, this was finally solved in the GATT Uruguay Round.

It’s now 2017 and Mr English’s first overseas trip is not to Asia but to Europe once again.

And for good reason. New Zealand is pursuing an FTA with the EU and will want a deal with post-Brexit Britain. This time however New Zealand is not the only demandeur. The EU may see value in a deal to restore its tarnished trade policy. Britain wants to show it is open for business.

New Zealand has been making quiet progress on the FTA. Scoping discussions were undertaken throughout last year. A new Partnership Agreement and bilateral trade dialogue were established in October.   The European Commission hopes to secure a negotiating mandate from Member States for the formal launch of negotiations early this year.

Both the Commission and New Zealand Government have indicated a desire to complete negotiations within two years, but Brexit raises questions of both timing and substance. Brexit will require the potentially lengthy unpicking and reshaping of the British trade relationship with the EU, and in turn the need for the EU to renegotiate its WTO commitments – including New Zealand’s arrangements for butter and sheepmeat.

Then there is the question about the EU’s ability to ratify FTAs – particularly those with a high level of ambition – given that 38 regional and national parliaments now have a role to play. Some constituencies within member states may not be enthusiastic about an FTA with New Zealand.

New Zealand also has a strong interest in negotiating an ambitious, high-quality and comprehensive bilateral FTA with the UK (which is the destination for around one-third of New Zealand goods exports to the EU and nearly half of New Zealand services exports to Europe).  The UK may not negotiate with trading partners until it has formally left the EU.

All of this makes an early visit to Brussels, London and Berlin a good move by our new Prime Minister.

Our publication on the opportunities of a NZ/EU FTA can be read here. A radio interview with Stephen profiling the visit can be found here.