MATTEO DI MAIO: Slim pickings in New Zealand trade deal

PUBLISHED: 09:00 04 November 2018

International Trade Secretary Liam Fox. Picture: Anthony Devlin - WPA Pool/Getty Images

International Trade Secretary Liam Fox. Picture: Anthony Devlin - WPA Pool/Getty Images

2016 Getty Images

The Kiwis would be more than happy with a free trade agreement. It is Britain who shouldn’t be, says MATTEO DI MAIO

The news that Liam Fox, the international trade secretary, is prioritising a free trade deal with New Zealand once the UK leaves the EU went down well in Wellington. “There are lots of other countries they could have chosen,” said David Parker, the country’s trade and export growth minister, “but they have chosen us and that’s good.” It certainly is – although it makes a lot less sense to the UK.

To understand exactly why the implications for New Zealand are quite so positive – and for the UK, much less so – it is worth looking back at the relationship between Britain and its former colony.

Of all the countries who saw their trade disrupted by Britain’s decision to join the European Economic Community in 1973, none felt the impact as harshly as New Zealand.

Prior to 1961, when negotiations for the UK to join the EEC first began, Britain took about half of New Zealand’s exports – roughly the EU’s own share of British exports today.

By 1973, the figure had fallen to 25% and it would continue to decline, as access to the UK market was effectively ended by the country’s membership of the EEC. (Today the figure is a paltry 3%.)

The blow this dealt to the New Zealand economy was such that even a period of radical liberalisation was not enough to fully rectify it. This, and other factors such as the oil shock and hiking commodity prices, led to a lengthy bout of economic downturn.

But New Zealand did eventually 
find another route. Faced with the 
loss of unrestricted access to its traditional market, the country 
turned elsewhere for trade. China, Australia and other members of the Asia-Pacific Economic Co-operation group (APEC) now account for 72% of its total exports.

Whether the country has recovered from the psychological effects of its abandonment at the hands of Britain is less clear. It had come at a time when Anglo-Kiwi friendship was still enjoying the boosting effects of wartime co-operation and it left a sour taste in the mouths of many.

Indeed, the possibility of still-harboured grudges could perhaps explain why New Zealand has not ruled out completing a free trade deal with the EU, at Britain’s expense.

Wellington’s negotiating position is clear: shared history should not permit the UK to gain preferential access to New Zealand’s economy. Parker has already stated that Brexit, and the prospect of a trade deal with London, does not diminish the huge potential gains for his country that would come from breaking down trade barriers with the remaining 27 member states of the EU. And with Britain seemingly headed out of the customs union, and Brussels already ahead of London in terms of negotiations, it could be that the EU ends up with better trading terms than the UK.

Unlike the last time that New Zealand and Britain significantly altered their trading arrangements, it seems that Wellington is the one with the upper hand, politically. Added to this is the fact that any form of bilateral trade agreement between the two is 
bound to be tilted in New Zealand’s favour.

While future arrangements are likely to enable better access for the British agriculture industry, NZ-UK exports tend to double up. The chancellor Philip Hammond has already highlighted the difficulty of explaining the pros of more lamb imports from New Zealand to Welsh hill farmers.

There is also the not inconsiderable matter of the 12,000 miles and 12 time zones separating Britain and New Zealand. Most economists still cite geography as a crucial factor in a country’s trading relationship. And despite recent technological advances, helping to weaken the link between 
trade and physical proximity, a new deal with New Zealand is unlikely to compensate much for Britain’s 
reduced access to closer, European markets.

Matteo Di Maio is a freelance journalist specialising in politics and economics, based in New Zealand

You've seen the news, now discover the story

The New European is committed to providing in-depth analysis of the Brexit process, its implications and progress as well as celebrating European life.

Try 13 weeks for £13

Support The New European's vital role as a voice for the 48%

The New European is proud of its journalism and we hope you are proud of it too. We believe our voice is important - both in representing the pro-EU perspective and also to help rebalance the right wing extremes of much of the UK national press. If you value what we are doing, you can help us by making a contribution to the cost of our journalism.

  • Become a friend of The New European for a contribution of £48. You will qualify for a mention in our newspaper (should you wish)
  • Become a partner of The New European for a contribution of £240. You will qualify for a mention in our newspaper (should you wish) and receive a New European Branded Pen and Notebook
  • Become a patron of The New European for a contribution of £480. You will qualify for a mention in our newspaper (should you wish) and receive a New European Branded Pen and Notebook and an A3 print of The New European front cover of your choice, signed by Editor Matt Kelly

By proceeding, you agree to the New Europeans supporters club Terms & Conditions which can be found here.



Supporter Options

Mention Me in The New European



If Yes, Name to appear in The New European



Latest Articles

ANTI-BREXIT EVENTS

Grassroots anti-Brexit campaigners are increasing the pressure on politicians ahead of a series of important votes this year. Here is a list of the events organised across Britain in the coming weeks and months.

Trending

Newsletter Sign Up

The New European weekly newsletter
Sign up to receive our regular email newsletter

Our Privacy Policy