EU market remains largely closed to NZ dairy

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The Dairy Companies Association of New Zealand (DCANZ) is disappointed that the free trade agreement (FTA) between New Zealand and the European Union leaves the EU market 98.5% closed to key New Zealand dairy products.

“The combination of very small quota volumes relative to the market size and trade-restrictive in-quota tariffs has this deal falling well short of being commercially meaningful for the dairy industry,” says DCANZ Chairman Malcolm Bailey.

DCANZ analysis of outcome value differs significantly to that calculated by New Zealand’s Government. While it can be theoretically claimed that the value of this access grows to $600m over seven years, the commercial reality is far less given the remaining trade restrictive in-quota tariffs and quota administration. In-quota tariffs of around NZ$630 for butter and NZ$435 for milk powder will constrain competitive opportunities, including versus alternative market opportunities closer to home.

“This is a considerable missed opportunity for the New Zealand economy as a whole when considering that dairy accounts for 28% of NZ exports and has been a pillar of resilience for the economy through COVID”.

DCANZ strongly encouraged the New Zealand Government to continue negotiating rather than close on an outcome that fails to broaden meaningful trade opportunities.

“Opportunities to reset and upgrade access with trading partners come along once in a generation. Failure to capitalise on this opportunity, as occurred with the NZ-UK FTA, leaves us poorly placed in this much bigger market for a long, long time”.

By not doing more to liberalize the dairy trade, the deal reached is also a lost opportunity for sustainable food systems. The EU has largely rejected the opportunity to provide its own consumers with access to NZ dairy products that have a considerably lower carbon footprint. New Zealand dairy farmers will be disappointed that their considerable efforts in adopting on-farm sustainability practices are not able to gain the extent of market recognition they deserve under this outcome”.

The agreement also includes the loss of New Zealand cheese makers’ rights to feta and gruyere. It will also prevent any new business development opportunities for parmesan. This is a significant blow to the many New Zealand feta, gruyere and parmesan cheeses which were last night celebrated for their quality at the annual champions of cheese dinner.

DCANZ acknowledges that the deal includes market access improvements for other smaller NZ export sectors beyond dairy and meat. But in terms of really addressing the large, more than 2:1, the goods trade imbalance between the EU and NZ the opportunity to really close this gap has been missed.

DCANZ thanks the New Zealand negotiating team for their hard work over the past four years. This negotiation was always going to be difficult because of entrenched EU protectionism which is increasingly out of step with global food production and sustainability trends.