Editorial: Here’s hoping Australia walks away from EU free trade deal

Bottles of Australian wine are displayed on a shelf for sale at a supermarket in Hangzhou in east China's Zhejiang province. Photo / AP

Editorial

EDITORIAL

Australian farmers have urged their government to walk away from a trade deal with the European Union if it shapes up along the lines of the one we’ve done.

We should hope they do.

Anything that delays the reduction of EU tariffs on Australian wine, honey, fruit or seafood will be an advantage for Kiwi exporters from the start of 2024.

It is unlikely they will walk away, though.

The Australian Government, like ours, is aware that the future of trade with Europe doesn’t rest with food commodities.

Australia will look to do a deal that offers opportunities for diversification and growth in the smart end of their economy - areas like technology and financial services.

They will also be well aware that unfettered access for dairy, beef and lamb exports is not on the table.

That was certainly the case for New Zealand.

The baseline for comparison with the EU trade deal we got, was no trade deal at all.

The deal we did with the EU is expected to save Kiwi exporters at least $110 million a year by 2029.

But that doesn’t measure the opportunities for longer-term growth in sectors where we don’t have traditional business connections with Europe.

Trade deals open new pathways along which business activity flows.

Dairy and meat exporters lose nothing in the deal the Prime Minister signed off in Brussels on Monday - and even if they are unable to be magnanimous about gains for other sectors, their chances of improved access in coming years have been greatly enhanced.

As recent upgrades to the China, Asean and Australian FTAs show, it is easier to advance free trade once a deal is signed and a framework is in place.

Australia may yet get a better EU deal than New Zealand. It is a larger economy and more likely to have leverage with a wider range of exports including rare minerals and energy.

New Zealand, of course, had almost no leverage in this negotiation having long since removed most of its tariff barriers.

The upsides for the EU were marginal. There will be cheaper Kiwi produce for their consumers - nice to have but hardly inflation-busting.

More broadly it was a chance for the EU to send positive political signals on trade liberalisation and globalisation.

To be fair to farmer groups in New Zealand, opposition has been muted since the deal was done this time last year.

If it hadn’t been reignited by Australian media, the signing this week might have passed without controversy.

There was no press release from National backing farmers or taking the opportunity to bag Labour for failure to deliver a better deal.

Trade deals remain one of the few bipartisan policy areas in New Zealand government.

The Nats understand the EU deal was reached by the same team of experienced negotiators that served them through the John Key and Bill English years.

They’ll be hoping they’re working with them after October as we try to progress even more complex deals with India and the US.