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EU and New Zealand sign free trade agreement

01/07/2022    16

The European Commission signed a free trade deal with New Zealand on Thursday (30 June), slashing much of the remaining tariffs between the two trading partners while keeping certain protections for European beef and sheep farmers and including unprecedented sustainability provisions.

After having focused on making the EU trade agenda more assertive in the past months and years, this is the first new free trade agreement (FTA) of the von der Leyen Commission. It could also be the first of a couple of FTAs that the Commission is trying to bring over the finishing line in the coming months.

“This trade agreement brings major opportunities for our companies, our farmers and our consumers, on both sides,” Commission President Ursula von der Leyen said. With a hint at Russia’s invasion of Ukraine, von der Leyen stressed the fact that it was a deal between democracies.

Enforceable sustainability provisions

On a visit to Brussels, New Zealand’s Prime Minister Jacinda Ardern stressed that the EU and New Zealand shared the same values and showed content that, in her opinion, the trade agreement enshrined some of the values that New Zealand and the EU shared.

The FTA is the first deal to include the new EU approach towards trade and sustainable development that was only presented by the Commission last week.

For example, the FTA includes sanctionable commitments to respect the Paris Climate Agreement. Moreover, the trade agreement has binding provisions on labour standards and a chapter on trade and gender equality.

Executive Vice-President of the Commission Valdis Dombrovskis said: “Simply put, these are the most ambitious sustainability provisions put in any trade agreement ever.”

“If either side fails to meet its obligations, they are enforceable through sanctions,” he said while adding that the sanctions would only be used as a last resort.

But the FTA also covers more straightforward interests. For example, tariffs for European cars and textiles, currently at 5-10%, will be abolished entirely when the FTA comes into force.

Agricultural safeguards

The negotiations for this trade deal had taken four years.

And even though the EU and New Zealand see each other as “like-minded partners”, the success of the negotiations was never guaranteed, with the last remaining differences only cleared during Ardern’s Brussels visit on Thursday. Especially the trade in agricultural products is usually a tough nut to crack in trade negotiations.

That is probably why von der Leyen stressed that “farmers on both sides will benefit” when she presented the deal on Thursday.

For example, more than 2000 European products would be protected through geographical indications, especially wines. Moreover, the EU could retain some trade protections for beef and lamb, as well as dairy products.

Prime Minister Ardern insisted that producers from New Zealand would also benefit. “Kiwi fruit is finally able to come into the European market tariff-free,” she said.

What’s next?

To come into force, the FTA has to be adopted by the European Parliament as well as by the trade ministers of the 27 EU member states.

It will be the first of a couple of trade deals in the pipeline, which the Commission would like to bring over the finish line after years of stagnation on this front. For example, deals with Chile, Mercosur and Mexico have long been negotiated and might soon be ready to be signed. Moreover, negotiations for a trade deal with India have just started.

Commissioner Dombrovskis stressed that the FTA with New Zealand was a good sign for a more open EU trade policy.

“The wider implications of this deal should not be underestimated. It shows that our trade agenda is not standing still, it is dynamic and it is evolving,” he said.

However, the real test for whether there is a new impetus in the EU’s trade policy still lies ahead.

While New Zealand is a “like-minded” trade partner with relatively few sustainability issues, a deal with Mercosur will have to answer much more serious sustainability questions, already raised by several EU governments, and a deal with India will have to come about with much less of the “like-minded” bonus.

Source: Euractiv