European Union and New Zealand trade officials are still hopeful that agreement on a free trade agreement (FTA) will be reached by the end of the year.
NZ’s agricultural trade envoy Mike Petersen says given the possibility of a no-deal, exporters are making contingency plans for such an event. But they also still hope a deal will be agreed so they won’t have to trigger plans for a no-deal.
The whole thing is a terrible mess, Petersen told Rural News last week.
“The worrying thing for me is the inability to get an agreement across the UK parliament.... But because they have voted against a no-deal scenario I think they will hold pretty strong.
“I have always argued that, in the end, they would do a deal because it would be economically bad for both the UK and the EU not to do a deal; the costs on both sides would be too great.”
According to Petersen, the British Prime Minister, Theresa May, is clever in saying there is only one deal on the table, and given that parliament has voted against a no-deal the only alternative is not to leave the EU.
“I wonder if that is going to start to shake the Brexiteers and make them think ‘crikey this thing may never happen now’. That seems to be the argument she is running.
“I also think the chances of a people’s vote or second referendum are very low. No one would want to put the UK through that horrible process – it’s too divisive.”
Petersen believes that in the end Conservative Party members will fall into line behind Theresa May because the last thing they would want is an election and the prospect of Jeremy Corbyn becoming prime minister.
While the shenanigans continues in the British parliament, NZ companies are working out what changes they may need to make when Britain finally leaves the EU.
Petersen notes that some are looking at having a stronger presence in continental Europe and moving some staff from London to Brussels, and to Amsterdam where Fonterra is based. Some companies have registered new offices in Europe.
“Where they register these offices will depend a lot on their customer base and key ports of entry to Europe such as Rotterdam in Holland and Antwerp in Belgium.”
Petersen believes any changes brought about by Brexit are unlikely to result in more NZ staff being employed by exporters to Europe.