Will the NZ/EU FTA ever be finished, asks Stephen Jacobi.

 In the Monty Python film, “Life of Brian”, Jesus’ Sermon on the Mount is poorly heard by some of the crowd, but the message is passed on: “Blessed be the cheese makers”. Two thousand years later cheesemakers are continuing to make their presence felt as New Zealand and the EU squabble over the use of certain names for cheese and wine, including parmesan, feta, mozzarella and prosecco (and a host of others).  The EU says these names are linked to traditional production methods in particular geographies in Europe. It proposes that New Zealand should set up a potentially onerous and expensive domestic regime to restrict their use, both at home and for export.  New Zealand wants to keep using those names which it considers as generic, especially for cheeses we export around the world.  Who after all has ever heard of a place called Feta in Greece?

A cheese by any other name …

This is not a small matter.  It is one of a number of issues complicating the conclusion of an FTA which has been under negotiation already for six years and which was preceded by years of exploratory work.  We first argued for this agreement back in 2010.  In 2015 we published a paper, drawing attention to the opportunities from a future FTA and urging the two governments to move ahead with negotiations as quickly as possible.

To be fair the EU and New Zealand have come a long way since then.  The 12th (virtual) round of negotiations is to take place this month. The French Presidency of the EU has let it be known they are not seeking a definitive outcome until after their Presidential elections in April.  That’s disappointing, if not altogether surprising.  Agriculture is always a touchy subject in France and the EU which was built on the back of the Common Agricultural Policy (CAP).  The CAP, which a generation ago brought us butter mountains and wine lakes, is a much reduced beast these days. Despite budget pressures and multilateral trade rules there is still ample scope to protect EU farmers from competition.

That gives rise to another problem in our FTA negotiation – although new market access has been offered for horticultural and some other products, no meaningful offer has yet been made on tariff elimination for our largest exports, dairy and meat: without this New Zealand is not prepared to write a blank cheque on these “geographical indications” or GIs for cheese and wine.

Cheesed off

 While progress is still being made in the negotiation, there are a range of other contentious issues. These include different approaches to digital trade and data protection; intellectual property protection, especially patents for EU pharmaceutical products; and government procurement.  The two sides are not even on the same page about rules of origin – what actually should constitute a product qualifying for tariff preference under the FTA.  And the EU appears to be unenthusiastic about undertakings on Indigenous trade such as have been included in the ground-breaking NZ/UK FTA.

A large problem looms in relation to sustainability.  Not that the two disagree about the need to ensure trade plays its part in the protection of the environment, but rather about the best way to do it.  The EU is embarking on a series of major reviews and reforms of policy in this space under the broad heading of the Green New Deal. Under the rubric of “EU fit for 55” it seeks to reduce the EU’s carbon emissions by 55 percent from 1990 levels by 2030 and achieve net zero by 2050.  That’s laudable, but the problem is that the FTA negotiation pre-dates the initiation of these policy reviews, which is making a Trade and Sustainability chapter difficult to conclude.

Who moved my cheese?

In case there is any doubt, we have not changed our view that concluding an ambitious, high quality and comprehensive FTA with the EU would be in New Zealand’s best interests.  We have even said clearly to the Government that we are not opposed in principle to GIs, provided the use of generic names is not compromised, the detail of the rules is clear and costs of the system are not too high.  We have no issue with the genuine GIs such as “Parmigiano Reggiano” (from Reggio Emilia and elsewhere), just with the generic “parmesan” (from Puhoi). This is of course predicated on the achievement of a comprehensive and commercially meaningful market access outcome.

We have no issue with the genuine GIs such as “Parmigiano Reggiano” (from Reggio Emilia and elsewhere), just with the generic “parmesan” (from Puhoi). This is of course predicated on the achievement of a comprehensive and commercially meaningful market access outcome. 

FTAs are always the art of the possible, but this negotiation has taken too long already.  In the 21^st century we need to move beyond the notion that New Zealand, with its vastly smaller levels of production, will decimate European dairy and meat markets.  We should be focusing our attention on opportunities arising from digital trade, services and investment. New Zealand is ready to expand the economic relationship with the EU which despite the difference of size and scale can benefit both parties.  But FTAs should lead to more trade, not less.  Cheesemakers can still be blessed but let them keep selling their cheese.

This post was prepared by Stephen Jacobi, Executive Director, NZ International Business Forum. He loves cheese.