Written evidence submitted by John M Weekes, Senior International Trade Policy Adviser (ANZ 0031)

1. The document “UK-New Zealand Free Trade Agreement: The UK’s Strategic Approach” sets impressive objectives for the UK-New Zealand FTA. It states, inter alia:

• A Free Trade Agreement (FTA) with New Zealand is part of delivering the Government’s top strategic trade priority of using our voice as a new independent trading nation to champion free trade, fight protectionism and remove barriers at every opportunity. The Government’s ambition is to secure FTAs covering 80% of UK trade within the next three years, to become a truly Global Britain.
• Strategically, the UK Government’s aim is to place the UK at the centre of a network of modern FTAs, turning our country into a global hub for businesses and investors who want to trade in dynamic areas of the world – especially in the Asia Pacific.
• Key benefits of an FTA with New Zealand include: Reduced barriers to trade in goods, which will make trade easier and cheaper for the UK’s existing exporters to New Zealand, whilst at the same time increasing choice and value for UK consumers.

(Bold emphasis added.)

2. I would like to focus on whether the Agreement lives up to two of these objectives. First, does the Agreement square with the Government’s top strategic trade priority? Does it reflect the priority of a “new independent trading nation to champion free trade, fight protectionism and remove barriers at every opportunity”? Second, has the Agreement been successful in “increasing choice and value for UK consumers”?

3. New Zealand is a significant supplier of agricultural products to the UK. These imports help contribute to the import requirements of the UK which is major net importer of food and agricultural products. In many instances it is EU countries which are the major competitors of New Zealand in meeting these import requirements of the UK. What seems odd is that the UK did not move to provide immediate duty free and quota free access to these New Zealand exports, especially when the UK continues to provide duty free and quota free access to EU products as was the case when the UK was part of the EU. For the most part these New Zealand products are competing, not with UK farm production but with EU imports into the UK.  What is the rational for Britain, as a newly independent trading nation, to continue to protect the EU’s market share for these products which results in higher prices for UK consumers than would be the case if trade with New Zealand was fully liberalized at the outset? Various analyses have looked at this phenomenon at the level of individual products.

4. The Committee might wish to seek clarification as to why UK negotiators adopted this approach. I would think that it is very unlikely that other countries, with which the UK is or will be negotiating (e.g. CPTPP members, the U.S., Canada), will want to accept that the EU will have a preferred position to them in the UK market. Nor does it seem reasonable that the UK should want to protect the EU’s preferential position in the UK market at the expense of its relationship with partners “in dynamic areas of the world – especially in the Asia Pacific”.

5. The Agreement contains chapters that deal with non-tariff barriers including notably technical barriers to trade (TBT) and sanitary and phytosanitary measures (SPS). As tariffs are reduced these barriers become increasingly important. Successfully addressing such measures is critical to ensure that new trade agreements deliver their intended benefits for both exporters and consumers.

6. Like most high quality trade agreements this Agreement sensibly follows closely the approach in the provisions of the WTO dealing with the same measures. Surprisingly, however, the general dispute settlement provision of the Agreement do not apply to the SPS provisions. Normally the dispute settlement provisions apply to all the provisions of a trade agreement. That is the only way to provide certainty that such measures are applied properly and are to the benefit of both exporters and importers. This departure suggests that one of the parties may not wish to respect the disciplines of this chapter. Or, perhaps New Zealand agreed to this knowing that they could rely on the WTO provisions and its dispute procedures. Or, maybe New Zealand was confident that it could also rely on the CPTPP disciplines and its dispute procedures, should the UK bid to join that agreement be successful.

7. Whatever the motivations, not accepting the jurisdiction of the dispute procedures seems an odd step for countries who aim “to champion free trade, fight protectionism and remove barriers at every opportunity”. The Committee might wish to reflect on the sort of signal this will send to other countries. As a former senior Canadian trade negotiator, I would not have been prepared to recommend that my government accept an agreement in which there was no recourse to dispute settlement in the event of a dispute about the application of the SPS provisions – or any other provisions for that matter. 

8. I hope these perspectives will be useful to the Committee in its deliberations.

June 2022