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TRADE - 20 June 2022


by Farm Europe

The European Commission has recently announced a renewed push to conclude the negotiations of a Free Trade Agreement (FTA) with New Zealand and Australia.

The New Zealand case is paradigmatic, but what Farm Europe outlines below can be largely said about the FTA with Australia.

New Zealand has no tariffs on imports of most products. Already today the EU can export to New Zealand free of customs duties. In agriculture only a few products face a low 5% tariff.

New Zealand is a large and competitive exporter of agriculture products, which account for 80% of the total exports of the country. In 2021 New Zealand exported 28 billion euros worth of dairy, eggs, meat, fruits and nuts, wine, and other agriculture products.

To the EU, New Zealand exports mostly agriculture products, whilst importing mostly industrial goods. The EU currently benefits from a positive trade balance with New Zealand.

Which will be EU’s gains with the FTA? It will hardly increase its exports, as New Zealand tariffs are either zero or very low. Only New Zealand can benefit, in the agriculture sector in particular, as EU’s tariffs are currently much higher.

The inevitable result of the FTA would be more New Zealand exports of dairy, meats, wine, fruits, and so on, and no further EU gains in the New Zealand market.

Not even in the industrial area should the EU expect significant trade advantages, as only a few products have a 10% tariff, most others are already duty free. And it should not be forgotten that New Zealand has FTAs with China, Hong-Kong, Singapore, Taiwan. Our agriculture sector will suffer for no good.

This FTA is thus not balanced in terms of gains and losses. It departs from a pragmatic approach to trade, and instead dwells entirely on an ideological approach that sees free trade as a good thing irrespective of its actual impacts.

Written by Farm Europe