The Dairy Companies Association of New Zealand (DCANZ) is calling for the European Union to move beyond dairy market protectionism in its FTA negotiation with New Zealand.
As the negotiations reach a critical juncture, DCANZ is concerned at rumours which suggest the EU is doubling down on keeping its market almost entirely shut to New Zealand dairy exporters.
“It is outrageous for the EU to maintain any pretence of sensitivity to imports,” says DCANZ Chairman Malcolm Bailey. “Both parties in this negotiation are globally significant and competitive dairy exporters and so we should be able to embrace a high level of trade liberalising ambition.”
DCANZ says assertions of EU dairy sensitivity go against the evidence. The EU is a highly developed dairy producer, producing more than six and a half times more milk than New Zealand. It is also the world’s largest dairy exporter accounting for around 30% of global dairy exports. Added to this, the EU has a large and highly traded internal dairy market with more than 4.43 million tonnes of cheese, 1 million tonnes of butter and 1.76 million tonnes of milk powder products being traded between its 27 member countries.
“We absolutely reject the suggestion of any sensitivities regarding dairy imports. EU member countries are not import sensitive; they are just choosing to exclude New Zealand from the dairy trade they benefit from with each other.”
The EU’s original market access offer limited access for New Zealand cheese, butter and milk powders to small, permanent quotas, with in-quota tariff rates. The starting quota volume for cheese was a mere 1500 tonnes out of a total EU cheese market of over nine and a half million tonnes. The butter and whole milk powder starting volumes of 200 tonnes were equally minuscule relative to the total market size.
In addition, proposed in-quota tariff rates would continue a significant level of market access impediment that would undermine the usability of the quota volumes.
“The volumes offered equate to only a fraction of a percentage of the total market, and when combined with in-quota tariff barriers would amount to little more than an illusion of access. This especially grates when the EU is also seeking to strip New Zealand cheese makers of the ability to use common cheese names such as feta, parmesan and gruyere. Not only are they trying to maintain unfair protectionism in the EU, but also extend this to the New Zealand market”
“DCANZ strongly supported the New Zealand Government in rejecting the EU’s previous market access offer as lacking credibility. With rumours suggesting that the forthcoming revised offer would similarly result in the EU market remaining almost entirely shut to New Zealand dairy exporters, we encourage the Government to do the same again.”
A 5% market access opening was seen as the minimum level of market opening for sensitive products when the WTO Uruguay Round was concluded more than a quarter of a century ago. Since then, the EU has made several political commitments to advance trade liberalisation, including signing up to target 2b of the Sustainable Development Goals: to correct and prevent trade restrictions and distortions in world agricultural markets.
As long-standing partners with shared values and a commitment to high standards, New Zealand and the EU have committed to working towards a deep, comprehensive, and high-quality FTA. DCANZ sees no reason why the EU shouldn’t match the access outcome New Zealand received in the recently concluded FTA with the UK: comprehensive tariff elimination. The EU has already eliminated dairy import tariffs in FTAs with the UK and Canada.
“You have to question why tariff elimination is not possible when EU member countries already trade dairy products within the EU internal market at volumes that add up to over a million tonnes for butter; are close to two million tonnes for milk powders; and are 13 times larger than New Zealand’s total annual cheese exports.”
DCANZ says the EU-NZ FTA negotiation presents an important opportunity for the New Zealand Government to support exporters in diversifying market opportunities and securing premium market returns in recognition of sustainability credentials.