News trade agreement
EU Dairy sector cracks deal with New Zealand
The European Commission and New Zealand signed a trade agreement last week. There is a lot of enthusiasm within the political ranks and there is talk of a historic deal. The European dairy sector is less enthusiastic.
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European Commission President Ursula von der Leyen and New Zealand Prime Minister Jacinda Ardern signed the deal in Brussels last week. This was preceded by approximately five years of preparation before all the frameworks were set. Von der Leyen speaks of a historic deal, which takes into account sustainability rules, working conditions and emissions. The agreement with the "Kiwis" should be a prelude to more such trade agreements, she said. The deal is now legally finalized before the European Parliament can give the European Council their approval.
The intention is that certain products will soon be able to be traded tariff-free. This includes New Zealand mutton and European pork and wine. The trade quotas have been stretched for other products. Including for dairy.
Uneven playing field
European Dairy Association (umbrella organization of advocacy groups) is not enthusiastic and speaks about disproportionate conditions between the Eurozone and New Zealand. This is partly due to the number of inhabitants: almost 450 million Europeans, compared to 5 million New Zealanders. The dairy sectors also differ greatly. EDA labels the New Zealand dairy sector as large-scale. About 85% of the export takes place by the New Zealand dairy cooperative Fonterra, which processes the milk of companies with an average animal number of 450 cows. The European dairy sector is smaller in scale, with many dairy parties in the market.
The EDA is concerned that New Zealand will have wider access to the European sales market. The butter quota is being extended by 15.000 tons to just under 90.000 tons. This is equivalent to 4% of European production. In addition, the cheese quota will be expanded by 20.000 tons, which is now 11.000 tons. For certain types of cheese, New Zealand will also have full market access within 7 years. New Zealand is also allowed to export 15.000 tons of milk powder to the EU. Import duties are still linked to the expanded dairy volumes.
Although the exact details are not yet known about the potential benefits for European exporters, the EDA does not expect much from this. This is due to the small scale of the New Zealand sales market.