Thomas Coughlan: Will Jacinda Ardern get an EU trade deal tomorrow?

Prime Minister Jacinda Ardern and French President Emmanuel Macron at a meeting where Ardern pressed the need for a trade deal. Photo / AP

ANALYSIS:

European trade negotiators are said to be some of the best in the business.

British negotiators reported the Europeans' Herculean stamina during Brexit talks, as the European negotiators waged a war of attrition, winding down the clock as talks repeatedly dragged on into the wee small hours on days with crucial deadlines.

Then, as if by miracle, a deal would be struck just as it needed to be.

These people are good, very good.

Overnight tonight, New Zealand will discover if New Zealand's trade negotiators, led by MFAT's Vangelis Vitalis and Trade Minister David O'Connor have managed to emerge from long sessions burning the midnight oil with a suitable deal.

The signs so far don't look promising.

Each day she has been in Europe this week, Prime Minister Jacinda Ardern has said she's quite happy to leave without a deal if what is on the table is not good enough.

Reading between the lines, this means market access for New Zealand's exporters. She's acknowledged the areas New Zealand wants wins just so happen to be areas where the EU is particularly "sensitive", like agriculture.

There are good reasons for Ardern to walk away if the EU's offer is poor. A bad deal would set a bad standard for future deals, and Ardern has political cover to walk away if she wants to - National's trade spokesman Todd McClay has said she should leave Europe without a deal, rather than sign a poor one.

You'd have to say, based on the gloomy tenor of Ardern's discussions, things don't look good for a deal tomorrow.

But then again, most European negotiations look they'll end in deadlock until a breakthrough at the 11th hour. If this deal was somehow salvaged, it would not be an unprecedented reversal of fortune, it would be very normal.

European domestic politics bodes ill for a deal. The EU is protectionist to its bones, erecting a wall of tariffs around its tightly regulated single market.

European governments tend to be fearful of liberalising international trade, even between European countries. French wine producers once hijacked trucks transporting Spanish wine, emptying gallons (sorry, litres) of the stuff onto a highway, citing a trade grievance.

French President Emmanuel Macron, who likely supports a deal at a personal, will no doubt be cautious of supporting it too forcefully, having been dealt a drubbing in recent French Parliamentary elections. He lost support on both his right and his left, each side backing a more protectionist trade policy. Similar stories play out across Europe.

New Zealand's trade to the EU is restricted by quotas and tariffs. A certain quantity of key exports (a "quota") are allowed to enter the EU at lower tariffs. New Zealand is looking to both increase its quotas and reduce the tariffs that apply within those quotas.

One problem with what the EU currently offers is that even in areas where its quotas are generous, the tariffs within those quotas are so high that New Zealand exporters fail to fill the quota because the tariffs make their goods so competitive.

That is why negotiators cannot just accept larger quotas, they need to reduce tariffs too.

It's not clear whether New Zealand is using the war in Ukraine to bolster the case for a good agreement, either by asking for New Zealand's strong response to Russian aggression to be rewarded with a deal, or by arguing that New Zealand's agricultural exporters could help European nations grappling with high food costs.

One area Ardern has brought up recently is climate change. The EU likes to see itself as the vanguard of the international climate response. Ardern reckons New Zealand's reputation on climate change is good enough that the EU could use the agreement as an example of how climate change could fit into future trade agreements.

Australian Prime Minister Anthony Albanese recently said the EU had stalled trade negotiations with Australia over the previous government's poor climate record. He has managed to get a commitment to restart trade talks in the coming months.

Ardern could easily look at this and think if climate change really is all that important to the EU's trade policy, New Zealand should be the first cab off the rank.

She told reporters today her message to the EU was if you could not sign a high-quality climate change-friendly trade agreement with New Zealand, than who could you sign one with.

We'll get an early answer to that question tomorrow.