Status quo amid Brexit 'divorce'

Mike Petersen says it may turn out that the UK and the EU form a single market for goods and food products. Picture / NZME

Envoy expects trade with UK and EU to remain unchanged for at least next two years.

Uncertainty persists as to what Britain's exit from the European Union will mean for New Zealand primary producers, but special agricultural trade envoy Mike Petersen says nothing will change while the parties go through their two-year "divorce" proceedings.

Petersen, who addressed yesterday's Red Meat Conference in Auckland, said he was confident New Zealand would maintain its strong trade relations with both the UK and the EU but he acknowledged that there was a lack of confidence in the short term.

"The first thing to reinforce is that nothing changes, and in my view nothing will change for at least the next two years while they undergo these divorce proceedings," Petersen said. "The big question facing exporters was how the so-called third party countries like New Zealand would be dealt with, once the split finally occurs."

Post Britain's exit, means Britain will be treated separately.

"Frankly no one knows how that is going to play out," Petersen said. "Based on our long history with the UK and Europe, we should be reasonably confident that we can get favourable access arrangements into the UK, which is really the piece that we are looking at for now," he said. "It boils down to there being two markets now instead of one."

Much would depend on how Britain itself negotiates market access with Europe. Petersen said it may turn out that the UK and the EU form a single market for goods and food products.

In the long run, Petersen said the emphasis of New Zealand's trade could move further toward Asia, particularly the Southeast Asian countries of Vietnam, the Philippines, Thailand, Indonesia and Malaysia. But the EU and the UK remain affluent markets and would continue to be important for New Zealand producers.

Another issue facing primary exporters would be the British Government's attitude to subsidies, as EU farm subsidies for UK farmers disappear. Petersen said that if UK producers were not getting EU subsidies on one hand, they might start looking for trade protection measures on the other.

He said New Zealand has good trade relations with the UK and the EU, and closely aligned regulatory regimes.

Beef and Lamb New Zealand chairman James Parsons said it was a matter of wait and see for meat exporters.

The UK receives around 5 per cent of New Zealand's total exports but the lamb and wine markets may be hit harder since they rely more heavily on the UK for exports than other sectors.

The EU is New Zealand's most valuable market for red meat and associated products, accounting for over $2 billion in trade last year.