Former Trade Minister David Parker & Prime Minister Ardern signed a free trade agreement with the European Union (EU), which they touted as an amazing victory. How good a deal actually was it? Since tariffs are in the world news now, lets take a quick look at that deal. The EU saved itself $280 million per annum in tariff payments to the NZ government. The Euros couldn't believe their luck. Dunedin could've renovated its hospital by now and a ton more infrastructure projects been underway had NZ's government not lost those revenues.
But, you may argue, the deal must've been reciprocal, so Kiwi's tariff payments to the EU fell by the same amount, right? It turns out, in exchange for EU firms paying the NZ government $280 million less, the EU only lowered tariffs on NZ firms by 1/3 as much, so just saved us $100 million. That amounts to a net loss to NZ of $180 million per annum. Why was the deal so biased? Aside from Ardern & Parker being unable to strike a good deal, the EU exports three times more to us than we do to them. To quote the European Commission, "The EU exports to NZ goods worth €5.5 billion a year and imports NZ products of €2.3 billion", so NZ has a trade deficit with the EU of around €3 billion (or $NZ 6 billion).
Why does NZ have such a huge trade deficit with the EU? Because the EU strictly limits access of our biggest export, agricultural products. Although I've only had a quick look, seems to me the Europeans couldn't believe what suckers the Kiwis were to sign a "Free Trade Agreement" with them, since it was not a Free Trade Agreement. The EU said at the start there was no way it'd budge from its strict entry controls & quotas on NZ agricultural products. The European Parliament stated, in relation to its trade deal with NZ, "The EU committed to taking European agricultural sensitivities fully into consideration in its negotiating strategy". On the other hand, former PM Ardern & Trade Minister Parker sold us out. They opened free, non-tariffed access to NZ for European agriculture, but went along with Europe keeping its door slammed shut to our agricultural exports (apart from limited quotas). Below is a European Parliament graph celebrating its booming unrestricted exports to NZ (light blue line) compared to our small exports to them (dark blue line). NZ's deficit with the EU is rising as we speak. Our PM should stay calm before hysterically embracing the EU as a bastion of free trade. Before he makes fun of America, he should look at the stupid "free trade" deals that NZ has made with the world, that aren't about free trade at all.
Click to view
Why does NZ have such a huge trade deficit with the EU? Because the EU strictly limits access of our biggest export, agricultural products. Although I've only had a quick look, seems to me the Europeans couldn't believe what suckers the Kiwis were to sign a "Free Trade Agreement" with them, since it was not a Free Trade Agreement. The EU said at the start there was no way it'd budge from its strict entry controls & quotas on NZ agricultural products. The European Parliament stated, in relation to its trade deal with NZ, "The EU committed to taking European agricultural sensitivities fully into consideration in its negotiating strategy". On the other hand, former PM Ardern & Trade Minister Parker sold us out. They opened free, non-tariffed access to NZ for European agriculture, but went along with Europe keeping its door slammed shut to our agricultural exports (apart from limited quotas). Below is a European Parliament graph celebrating its booming unrestricted exports to NZ (light blue line) compared to our small exports to them (dark blue line). NZ's deficit with the EU is rising as we speak. Our PM should stay calm before hysterically embracing the EU as a bastion of free trade. Before he makes fun of America, he should look at the stupid "free trade" deals that NZ has made with the world, that aren't about free trade at all.
Click to view
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.
5 comments:
It's always good to hear the truth, rather than the media's fauning praise of Jacinda, even if the truth isn't good news.
Given the names you quote, what else could we expect?
I recall Jacinda Ardern saying she wanted to put things in place that can't be easily undone by future right wing governments. In the EU FTA I recall we are now tied to various rules around climate change commitments, labour laws, anti competitive tax rates and I am sure there was race and gender stuff in there as well.
This is not the ' first time NZ has run into a brick wall with Trade to both UK & Europe '. Around the 1970's when the UK was considering joining the Common Market, NZ had been reliant on the UK for much our our Dairy & Meat exports.
At this point the then NZ Govt made hasty travel arrangements to the UK, to speak with the [then] UK Govt about protection of [mainly] our dairy products into the UK.
Sadly no assurances were gained so we ' once again fell at the fence on the race track'. Margaret Thatcher, an ardent Common Market fan, then ' put the lid on the coffin of NZ trade to the UK '.
The Irish then stood up and ensured our butter exports to the UK [and Europe] took a hit. Europe then applied ' muscle to our cheese '.
NZ had to change, re-applying to both the UK and Europe on Trade deals, especially Agricultural items. We became subject to ' quotas ' and import requirements created by the EU that would affect trade, not made easy across the following years.
There’s that Ardern Midas touch again, turning stuff to shit.
You gotta laugh 😂
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