25 Feb 2019

NZ may feel heat of UK-EU trade fight after Brexit

4:08 pm on 25 February 2019

New Zealand exporters could get caught in the crossfire of trade battles between Britain and Europe after a no-deal Brexit, a senior trade negotiator has warned.

An aerial view of a container ship carrying exports (file)

New Zealand has the right to sell 228,000 tonnes of sheepmeat worth over $2 billion to Europe annually. Photo: 123RF

That was because agricultural product that traditionally went from Britain to the EU would stay at home, displacing New Zealand goods.

The warning came from Jeff Grant, as political gridlock in London pushed Britain ever closer to crashing out of the EU without a separation agreement.

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Jeff Grant Photo: Ross Miller

Mr Grant is a former farmer, MP and agricultural administrator, who has been posted to London and Brussels to safeguard New Zealand's interests in the meat trade.

New Zealand has the right to sell 228,000 tonnes of sheepmeat to Europe annually, and that is worth over $2 billion. That is due to be split 50-50 between the United Kingdom and the EU after Brexit, under a proposal that is being challenged by New Zealand at the WTO.

But Mr Grant cited a more immediate problem. "At the moment, Welsh lamb is looking at facing a tariff of 40 percent to 45 percent (for post Brexit sales to Europe)," Mr Grant said. "So that product will stay in the UK market rather than being exported, and that would be equivalent to about half of all New Zealand sales."

Mr Grant then referred to something that might give New Zealand exporters a short breathing space. That was the existence of contracts to sell meat to British supermarkets, wholesalers and catering companies.

These agreements would be contractually enforceable after Brexit, so existing sales would linger on, but the contracts would still gradually expire.

"The reality would start to hit after three or four months," Mr Grant said. "If there was no progress between the UK and Europe, then the market would start to tighten.

"The new spring lamb would start coming on in the UK and the price would crash in the UK."

Mr Grant said no one benefited from a no-deal Brexit - the cliff-edge, he warned, was just over 30 days away. And while there was more desire now for a deal than before Christmas, "there is still difficulty around the tribal politics that currently exist in Westminster."

Meanwhile, the campaign against a 50-50 split of meat quota is continuing, with or without a no-deal Brexit. Mr Grant said the WTO had received the UK / EU proposal to split the meat quota between themselves, half in half.

New Zealand had made submissions against those proposals, and these submissions were currently being assessed.

A decision would be made later this year. However, any verdict could be taken to appeal, and a shortage of appellate judges might make it hard for any appeal to be scheduled.

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