Towards an EU-New Zealand Trade Agreement
On the 22nd of May 2018, the Council of the European Union authorized the decisions to open negotiations for a Free Trade Agreement between the European Union and New Zealand. The council published the mandate for the trade agreement on the 25th of June 2018.
In line with announcements made by president Jean-Claude Juncker on Wednesday (13 September 2017) in Strasbourg, the Commission released the draft mandates it is requesting from member states to negotiate free trade negotiations with Australia and with New Zealand. It also published executive summaries and the whole Impact Assessments that the Commission is bound to run before putting any decision’s proposal to the Council.
The two draft mandates for the FTAs with Australia and New Zealand are nearly identical and are in accordance with the scoping exercises that were adopted last April (see ESF PC30 of 30 June 2017). They contain well-known EU goals in FTAs, and are structured like the future table of content of the future deals .
The mandates also stand out for calling for a high degree of ambition in the area of services: the EU wants the two parties to conclude free trade agreements that go beyond the offers made in the currently stalled multilateral Trade in Services Agreement – or TiSA – negotiations.
Furthermore, the Agreement should include rules concerning “performance requirements related to foreign direct investment”. This is an issue that ESF should look at into more details, since it ensure that none of the Parties may impose, or enforce any requirements, or enforce any commitment or undertaking, in connection with the establishment, acquisition, expansion, management, conduct or operation of all investments in its territory to exporters or investors activities listed in the agreement (see Article 8-5 of CETA as a reference).
The Agreements should also contain regulatory disciplines. “To that end, the negotiations should cover matters such as:
It is also interesting to note that the mandates also include the negotiation of provisions on banning forced data localisation requirements (see page 6 of the Annex): “In the context of the increasing digitalisation of trade, the negotiations should result in rules covering digital trade and cross-border data flows, electronic trust and authentication services, unsolicited direct marketing communications, and addressing unjustified data localisation requirements, while neither negotiating nor affecting the EU’s personal data protection rules”. So, it seems that the Commission, going beyond the already proposed wording on Digital Chapter in EU-Mexico FTA and EU-Japan FTA, is willing to find a solution on the cross-border data flows and data localisation issues, which is – as you know – completely stuck yet. The recent proposal for a regulation on a “framework for the free flow of non-personal data in the European Union” might be a subject that we would need to monitor to see, once the solution within the EU would be found, whether it would be envisaged to apply it also outside the EU. Comments are welcomed.
It is also interesting to look at what is not in the mandates. And that leads us to the recent debate on the competence on investment in trade agreements. The draft mandates do not include a recommendation to allow negotiations with Australia and New Zealand on investment protection.
Please consult the following links for more details on this recent development
New-Zealand (Aotearoa in Maori) is both a representative democracy and a constitutional monarchy with Queen Elizabeth II as the country’s head of state. It has a very specific administrative organisation due to its history. The Realm of New Zealand is the entire territory on which the head of state exerts its sovereignty through the Governor-General. That area comprises: Tokelau, the Ross Dependency, the Cook Islands, Niue and New-Zealand. The latter, corresponding to the country of New-Zealand, is a unitary state though it is divided into sixteen official regions. New-Zealand is a pro-active country in concluding FTAs. It has implemented nine agreements with Australia, both Australia and the Association of South East Asian Nations (ASEAN), China, Hong-Kong, Malaysia, Singapore, Thailand, the Republic of Korea and together Brunei Darussalam-Chile-Singapore. It is a member of the currently concluded Trans-Pacific Partnership (TPP) agreement; it also has concluded an agreement with the Gulf Cooperation Council (GCC) and was a member of the Anti-Counterfeiting Trade Agreement (ACTA). Finally, it is negotiating with India, the Pacific islands, the Russia-Belarus-Kazakhstan Customs Union, and together the ten ASEAN countries-Japan-China-the Republic of Korea-India-Australia; in addition, it takes part to the negotiations on the Trade in Services Agreement (TiSA). Especially, New-Zealand has been trading with Australia under a Closer Economic Agreement since 1983, which covers substantially all trans-Tasman trade in goods – including agricultural products – and trade in services. This partnership dates back to 1922 and had been modernised several times. It is important to realise how close relationship it is, because this will have an impact on our future FTAs with both parties.
The potential FTA with New Zealand could act as a beachhead into Asia for European Business. NZ is a well-regarded trading partner with a stable and open economy and excellent access and connections both economic and political, into the Asia-Pacific.
New-Zealand is the 53rd largest economy in the world and generated a GDP of $205.853 billion in 2017. The population reached 4,793 million of inhabitants in 2017. The World Bank report on “Doing Business” ranked the country on the ease of doing business as number 1 out of 190 in 2016, showing that the country is at the top of the freest market economies in the world in spite of its geographical isolation.
With bilateral trade in goods amounted to €8.7 billion in 2017, the EU ranked 3nd largest trading partner of New-Zealand while New-Zealand was the 50th largest trading partner of the EU. When considering trade in services, it first needs to be highlighted that New-Zealand’s economic share in services accounts for 69% of the country’s GDP and the sector employs 3 out of 4 jobs. The EU-New Zealand trade in services represents 1/3 of their total trade, amounting to €4.3 billion in 2015. For New-Zealand, the EU was the 3rd largest services exports destination and the 2nd largest source of services imports in June 2015. Top imports include transport, commercial services and travel. More globally, nearly two thirds of bilateral trade in services come from travel (€1, 028 billion), transportation (€177 million), education travel (€111 million) and commercial services (€362 million) such as merchanting, commission agent services, legal and other professional services, computer and IT services, royalties and licensing fees, financial and communications services.
EU – New Zealand Free Trade Negotiations Background
Sine 1999 the EU and New Zealand have bilateral agreement for mutual recognition that aims to facilitate trade in industrial products between the EU and New Zealand by reducing technical barriers, including assessment materials.
New Zealand’s minister for trade and the EU’s Commissioner for trade held a meeting on the 7th of March 2017. In this meeting they announced the end of preparatory talks for potential EU-New Zealand free trade agreements negotiations. The next step will be the European Commission will ask the Member States for negotiating mandate to negotiate on behalf of the EU on the basis of specific objectives.
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