APEC NEWS RELEASE: Issued by The APEC Business Advisory Council (ABAC) Ha Long, 29 July 2022 – Asia-Pacific business leaders in the APEC Business...
(Br)exit stage left?: The UK/EU divorce and trade implications for New Zealand

Brexit has a certain Humpty-Dumpty quality to it
The already-parlous state of the Brexit process has worsened this week, with a decision by PM May to delay the Parliamentary vote on the UK-EU Withdrawal Agreement in order to go back to the EU27 to seek a more palatable deal – an outcome which seems increasingly improbable – and an unsuccessful Tory leadership challenge. Where this leaves Brexit, and New Zealand’s export interests, is far from clear.
The UK is due to leave the EU in a little over three months’ time, with even earlier deadlines for getting the requisite legislative changes in place, but the path ahead – already murky – is now even more opaque than it was before.
Major Brexit developments this week
On Monday, the European Court of Justice delivered a judgment on the ‘Article 50’ process (the mechanism under which the UK formally leaves the EU next March), which confirmed that the UK can unilaterally withdraw its notification of departure from the EU. Previously it had been thought that the other EU member states would need to agree (with all of the tricky politics this would entail), so the Court’s ruling has been hailed as a victory by Remainers.
“…the path ahead – already murky – is now even more opaque than it was before…”
Separately, on Monday PM May postponed the scheduled vote in the House of Commons on the UK-EU Withdrawal Agreement. It had become clear that she would lose the vote by a “significant margin” (to use her own words), with opposition from hardline Brexiteer MPs and governing partner the Democratic Unionist Party, unhappy about the Agreement’s “backstop” element. The backstop would have acted as an insurance policy to prevent a hard border in Ireland, should the UK and EU fail to agree a new bilateral trade deal by the end of 2020, but would potentially have meant the UK remained subject to EU rules (and without a voice to influence them) indefinitely. The non-binding negotiated ‘Political Declaration’ on the future trade relationship, which accompanies the Withdrawal Agreement, had also attracted adverse reactions.
Dismal prospects for a more palatable deal
PM May immediately returned to European capitals to seek changes to the backstop, but it has been made clear to her that new negotiations are not an option. The Commission has signalled only a modest degree of flexibility on offer over how to facilitate UK ratification of the current deal. Subsequently on Wednesday evening London time, PM May saw off a Tory leadership challenge. European leaders are reportedly preparing to welcome the result but also to rule out any significant concessions on the Brexit deal. She returns to Brussels for an EU Summit on Thursday.
Where to next?
The European Commission has indicated that it is stepping up planning for a “no-deal” outcome (that is, a scenario, in which the UK leaves the EU with no replacement bilateral arrangements in place). Such an outcome is widely expected to do both short-term and longer-term damage to the UK economy and trade interests; the necessary infrastructure and systems for a UK operating outside of the Single Market and without any FTAs will not be in place by March, and at the very least, there will be severe disruption for a period – including potentially for New Zealand exports.
Uncertainty prevails. Possibilities include a second Commons vote in the coming weeks on a (perhaps slightly tweaked) Withdrawal Agreement; a second Brexit referendum; a Tory leadership contest and/or a General Election; or – most concerning of all – a no-deal outcome on 29 March.
Where does this leave the UK-NZ trade relationship?
What this means for trade with New Zealand and others, and for the future of an independent trade policy for ‘Global Britain’, is far from clear. It may be that Brexit is delayed or deferred for an as-yet-to-be-determined period, meaning that the status quo ante prevails for New Zealand exports; this would also mean, of course, that the UK is not in a position to negotiate potentially advantageous trade deals (see our recent report on a prospective UK-New Zealand FTA), and the current deeply unhelpful climate of uncertainty continues.
On the other hand, a no-deal outcome would free the UK’s hands to negotiate – and indeed would provide a compelling imperative to do so, for the UK at least – but whether others would want to engage, when so much remained unresolved with the EU, is another question entirely.
This post was prepared by Stephanie Honey, Associate Director of NZIBF.
REGISTER WITH TRADE WORKS
Register to stay up to date with latest news, as well as saving and discussing articles you’re interested in.
Latest News
Asia-Pacific Business Leaders to APEC Leaders: Speed up economic recovery and regain growth momentum
APEC NEWS RELEASE: Issued by The APEC Business Advisory Council (ABAC) Ha Long, 29 July 2022 – Asia-Pacific business leaders in the APEC Business Advisory Council (ABAC), meeting this week in Ha Long, Viet Nam, expressed deep concern about the unprecedented crises...
TradeWindow: Digital trade provides hope through challenging times
It won’t come as a surprise to many people to hear that we remain in a very challenging situation when it comes to global business. Our exporters are operating in an environment that is difficult to navigate due to continuing uncertainties – the seemingly endless...
TRADE AND CLIMATE POLICIES NEED TO WORK TOGETHER – BUSINESS FORUM
A new report, commissioned by the NZ International Business Forum (NZIBF) and prepared by Adrian Macey, former Climate Change Ambassador and World Trade Organization (WTO) Lead Negotiator, shows that trade policy and actions to address climate change can be...
Trade and Climate Change: State of Play
TRADE AND CLIMATE CHANGE: STATE OF PLAY. A discussion paper prepared for the NZIBF by Adrian Macey, June 2022. Download here.
THE NZ/EU FTA IS LIKE THE CURATE’S EGG
In which we like the good parts of the NZ EU FTA…. Who remembers the curate’s egg? It’s when the nervous Curate, asked by the Bishop, if everything is ok with his boiled egg, replies “It’s good in parts, my Lord”. So too the recently concluded NZ/EU FTA, which has...
ADDRESS TO THE FONTERRA ALUMNI GOVERNANCE DEVELOPMENT WORKSHOP
ADDRESS TO THE FONTERRA ALUMNI GOVERNANCE DEVELOPMENT WORKSHOP AUCKLAND, 29 JUNE 2022 STEPHEN JACOBI EXECUTIVE DIRECTOR NZ INTERNATIONAL BUSINESS FORUM THE GLOBAL GOVERNANCE CHALLENGE Thanks to my friend Janine Smith for inviting me to speak to you today....
NZ EU FTA – A MIXED BAG, SAYS BUSINESS FORUM
Reacting to the overnight conclusion of negotiations for a free trade agreement between New Zealand and the European Union, the NZ International Business Forum (NZIBF), which brings together a cross section of major exporters, said the outcome was mixed in terms of...
NZ EU FTA COMING DOWN TO THE WIRE – HOLD THE LINE, SAYS BUSINESS FORUM
As negotiations accelerate to conclude an ambitious free trade agreement between New Zealand and the European Union, the NZ International Business Forum (NZIBF), representing a cross section of major exporters, urges the Government and its negotiators to hold out for...
WTO BACK IN BUSINESS – INTERNATIONAL BUSINESS FORUM
Media release, 19 June 2022 The NZ International Business Forum (NZIBF) welcomes the outcome of the World Trade Organization (WTO) 12th Ministerial Council meeting in Geneva and congratulates Trade Minister O’Connor and officials. “It’s great to see the WTO back in...
Address to the 50th One Stop Update for the Accountant in Business
ADDRESS TO THE 50TH ONE STOP UPDATE FOR THE ACCOUNTANT IN BUSINESS CHRISTCHURCH, WELLINGTON, AUCKLAND, MAY 2022 STEPHEN JACOBI EXECUTIVE DIRECTOR NZ INTERNATIONAL BUSINESS FORUM ONE STOP GLOBAL ECONOMIC UPDATE Thanks to Brightstar for once again inviting me to...
Remarks by Rachel Taulelei to APEC Ministers Responsible for Trade, 21 May 2022
ABAC NEW ZEALAND REMARKS TO ABAC-MINISTERS RESPONSIBLE FOR TRADE DIALOGUE 21 MAY 2022 RACHEL TAULELEI ABAC NZ Chair, Ministers The Free Trade Area of the Asia Pacific (FTAAP) remains the preeminent economic priority for the Asia-Pacific business community. It...
Deepening ECONOMIC INTEGRATION and EQUIPPING BUSINESS FOR DYNAMIC, INCLUSIVE and SUSTAINABLE GROWTH ARE KEY to ECONOMIC RECOVERY, say business leaders
Vancouver, 28 April 2022 –Asia-Pacific business leaders in the APEC Business Advisory Council (ABAC), meeting this week in Vancouver, affirmed their determination to continue to work closely together to respond to the challenge of sustaining the region’s growth...
FROM APEC AND CPTPP TO IPEF – SMALL STEP OR GIANT LEAP?
The US idea of an Indo Pacific Framework (IPEF) continues to gain traction but is not without complication. Aotearoa-New Zealand is a great joiner - from the very beginning of the United Nations to the important economic institutions like the WTO, APEC, CPTPP and...
Remarks to Foreign Affairs, Defence and Trade Committee
NZ INTERNATIONAL BUSINESS FORUM REMARKS TO THE FOREIGN AFFAIRS, DEFENCE AND TRADE COMMITTEE INTERNATIONAL TREATY EXAMINATION OF THE NZ/UK FREE TRADE AGREEMENT 17 MARCH 2022 STEPHEN JACOBI EXECUTIVE DIRECTOR Madam Chair, Members of the Committee Thank you for the...
Submission to the Parliamentary Foreign Affairs, Defence and Trade Committee
INTERNATIONAL TREATY EXAMINATION OF THENEW ZEALAND UNITED KINGDOM FREE TRADE AGREEMENT MARCH 2022 Introduction and Summary 1. This submission is made on behalf of the New Zealand International Business Forum (NZIBF) whose members are listed at Annex A 1 . NZIBF is a...