Time to focus on Europe! Dominion Post – February 2010 By Stephen Jacobi

The recent NZ/EU Trade Conference in Auckland was a timely reminder that the 27 member states that comprise the European Union are of fundamental and abiding economic and political importance to New Zealand.

While much attention continues to be focused, quite rightly, on Asia, the EU and New Zealand are likeminded partners closely linked by heritage and common values.  Over time the relationship has been transformed as New Zealand has overcome the challenges of British entry into the European Community.   The face of Europe has also changed fundamentally with the emergence of today’s increasingly comprehensive political and economic union characterised by free movement of people, capital, goods and services.

The EU is now a single market of around 500 million people.  The EU is one of the heavyweights of the global economy – the world’s largest exporter, importer, investment source and destination.  The EU is also a key player in many international issues of interest to us including trade, security, climate change and sustainable development.

The EU is New Zealand’s second largest market after Australia, taking around 18 percent of exports and imports.  The EU is our largest, highest value and in many cases fastest growing market for key export products like butter, lamb, apples, kiwifruit, seafood and wine.  The EU is an important source of inward investment, technology, immigration and tourism.

At this week’s Trade Conference Jade Software and Navman Wireless outlined their success in highly competitive and sophisticated European markets.  From a European perspective Siemens spoke of opportunities in New Zealand including supplying turbines for the Makara wind farm.

For much of the second half of last century New Zealand’s relations with Europe were dominated by difficult annual negotiations over lamb and dairy access. The Uruguay Round agreements put this access on a more permanent basis, ending the annual pilgrimage of Ministers to Europe but also the less frequent visits of European Commissioners to New Zealand.
Today there is some risk that New Zealand might be perceived as marginal player in terms of European interests particularly as New Zealand ranks only around 50th in EU external trade.

At the Trade Conference, EU senior official Mauro Petriccione was decidedly frank in saying that if New Zealand wanted a free trade agreement then the business case would have to be made to stakeholders in Europe of why this would be of benefit to them.

The fact is that the EU and New Zealand have been looking in different directions for much of the last thirty years.  As a consequence of Britain’s entry into the European Economic Community in 1973 New Zealand deliberately sought to develop economic relationships closer to home.  In Europe meanwhile the ongoing enlargement of membership has seen a range of new players emerge within Europe: our relations with some of them are decidedly thin.

More recently the EU has negotiated a series of free trade agreements in the Asia Pacific region including with Chile and Korea.  Agreements with Canada and India are under negotiation.  These developments have implications for New Zealand: they could result in greater competition for New Zealand in EU markets and greater competition in those markets we are ourselves keen to develop.

New Zealand has now proposed a comprehensive bilateral agreement as a new framework for the relationship.  The proposed agreement is much broader than an FTA but has some useful provisions on trade facilitation and economic co-operation that would be helpful for business.

In today’s environment it would be a mistake to think of Europe solely as a competitor.  Business has a role to play in purposefully building the business case for an expanded relationship as we have done successfully with the United States, Japan and Korea.

It is sometimes said that New Zealand has all the qualifications for entry into the EU except the geography.  In recent years our geography has helped focus attention on own region.  But if we have learned one thing from our economic history it is that we must have a diversified trade strategy.  Paradoxically since all that has happened in the last thirty years, that’s why Europe remains important to us.