Government waging war on another global scourge

Roger Partridge
12 June, 2020

This week, Trade and Export Minister David Parker was exposed to one of the world’s worst ailments: trade protectionism.

After nearly two years of negotiations, the EU leaked its agricultural “offer” to New Zealand to European media.

The offer is derisory. As Parker put it, while New Zealand imports about a kilogram of cheese per Kiwi from the EU, the leaked offer proposes letting New Zealand export only 3 grams of  cheese per EU citizen – and then only at punitive tariff rates.

The irony of New Zealand catching a dose of European protectionism just as it has fought off another global contagion is hard to miss.

Parker was rightly outraged – both at the terms of the offer and that the EU decided to leak it ahead of formally communicating it to New Zealand. This is not the act of a constructive trading partner.

Over the last few years, the EU has harrumphed outrage at tariffs imposed on European goods by the Trump administration. The picture painted by the EU is of an inward-looking, anti-trade America compared with an outward looking, pro-free trade EU.

Unfortunately, the EU’s self-image is as delusional as President Trump’s tweets. Even on manufactured goods, EU tariffs (for example, on imports of US-made automobiles) have historically been higher than those imposed by the US on European cars.

On agricultural products, the tariffs (and quotas) imposed under the EU’s Common Agricultural Policy are even more onerous. The policy is designed to protect European farmers from international competitors. But it does so at the expense of global prosperity, particularly in the developing world.

New Zealand’s butter exports to the EU are subject to a tariff of €189.6 per 100kg. The tariff on cheese exports is higher still, at €221.2 per 100kg. Combined, the suite of EU quotas and tariffs imposed on Kiwi agricultural exports to the EU means this country’s exports are a small fraction of their potential under a free trade agreement (FTA).

With almost 500 million consumers, the EU is the largest trading partner with which New Zealand does not have an FTA. Securing one would be a huge win.

Kiwis should all hope the Government has just as much success fighting the affliction of EU protectionism as it did against Covid-19.

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