UK warned to honour FTA commitments

Dairy Companies of New Zealand (DCANZ) chairman Malcolm Bailey says while he welcomes the intent of the UK to join the group, he wants the NZ government to send a strong message to the UK about how it must honour its commitment to freeing up global trade. He says before being admitted to the CPTTP, as the first nation outside the trans-pacific region to benefit from it, the UK must fully embrace free trade. He wants actions, not just words.

Bailey says the UK’s application to join CPTPP is another great sign of its interest in advancing global trade liberalisation. 

But he says the real test of UK trade leadership comes from how it honours its existing commitments and what it is prepared to put on the table in negotiations.

“Despite the UK’s strong statements of ambition, including for a high quality UK-NZ FTA, we are yet to see it remedy concerns about diminished quota access following Brexit, and we have detected hesitancy on its part to bringing real liberalisation to the FTA negotiating table.  A

voiding a disconnect between intent and action is important if current and potential trade negotiating partners are to have confidence in the UK’s stated ambitions,” he says.

Bailey says the NZ dairy sector is placing priority on the UK-NZ FTA agreeing to an end point of comprehensive tariff elimination for all dairy products. He says this would put New Zealand dairy exporters on par with European exporters in terms of the level of market access they have had into the UK market for nearly 50 years.  He notes that the UK has reconfirmed its ability to provide full liberalisation on dairy through its recently concluded bilateral trade agreement with the EU.

“The UK, as a major economy forging its own independent trade policy, has a unique opportunity to set the tone of global trade policy at this crucial moment. 

The world needs frictionless trade to support Covid-19 pandemic response and economic recovery, and as protectionism threatens to rear its ugly head in other countries’ Covid-19 responses, unequivocal leadership from the UK would give the global economy much needed confidence,” he says.

Bailey says the UK needs to convert its statements of commitment to leadership in global trade liberalisation to meaningful action.

The UK is New Zealand’s sixth largest trading partner, with two way trade of almost $6 billion in 2019.  The CPTPP is an 11-member trade agreement involving New Zealand, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, Singapore, and Vietnam. 

The more the merrier

Trade and Export Growth Minister, Damien O'Connor, says New Zealand has always supported the CPTPP by those willing to meet the agreement's high quality and says it's good to see that the UK intends to take the formal step shortly to start this process.

He says the challenges facing the global trade and economic environment have been compounded by Covid-19.

"NZ sees the CPTPP objective of maintaining and growing open, rule-based trade, as more important than ever. We believe the CPTPP can provide leadership in our region and beyond to drive post-Covid economic and trade recovery. The UK's move to join the CPTPP underlines the agreement's importance in this regard," he says.

O'Connor says, to start this process, the UK needs to present a letter to New Zealand, as Depository for the CPTPP, formally expressing its interest in joining the 11 member trade agreement. Under CPTPP guidelines, the next step will be for all CPTPP members to discuss the United Kingdom's request, and establish a working group to negotiate UK accession to the Agreement.

NZ launched trade negotiations with the UK in June 2020.

"Both sides see conclusion of a high quality, comprehensive and future-focused FTA as a valuable stepping stone towards the UK joining the CPTPP," he says.