Guest Post: Brexit
A guest post by Lewis Holden:
Pending a miracle, the UK will leave the European Union on 29th March. Whether Brexit is a no-deal “hard” Brexit or under the auspices of Theresa May’s transitional Brexit deal will be determined when the deal goes to a vote in the UK’s parliament as soon as next week. There’s a myriad of issues to be dealt with, but either way, Brexit creates an immediate opportunity for New Zealand’s exporters. For New Zealanders who remember or at least have studied the effects of the UK’s 1973 membership of the then European Economic Community (EEC), it’s an opportunity with more than a hint of historical irony and for that reason alone one we ought to leverage to our maximum benefit. We have the best chance in almost half a century to get a deal with the UK that is very much in our favour – and we should grab that chance.
After all, when the former Brexiteer UK Foreign Secretary Boris Johnson stated that New Zealand was “stabbed in the back” along with other Commonwealth members in 1973, he wasn’t wrong. The immediacy of Brexit means a New Zealand – UK Free Trade Agreement is now a priority. While the transitional period deal that the House of Commons will shortly vote on could mean a drawn-out negotiation of an FTA with a clear timeframe, New Zealand would be one of many players trying to secure our trade with the United Kingdom. A no-deal scenario would be best for New Zealand to get maximum leverage in FTA negotiations. The UK’s government will be desperate to get new agreements in place and fast – in their own words “from exit day or as soon as possible.”
Our Ministry of Foreign Affairs and Trade has recently launched a dialogue on the proposed FTA as part of public consultation. Asking such apparently non-rhetorical questions as what we want to see included in the deal, the consultation comes with positive comments from the Prime Minister about our “deep” relationship with the United Kingdom. This is an odd way of describing our former coloniser – with whom trade has always been a major issue. It’s clear though that simply ensuring trade as it stands carries on post-Brexit is the priority. We could aim a bit higher.
Leaving the EU means that Britain’s farmers will no longer be a part of the Common Agricultural Policy. This agricultural subsidy program is described as not achieving any of its stated objections and being the most environmentally destructive policies in the northern hemisphere. The EU spends about 40% of its annual budget on CAP. Incidentally, one of its biggest supporters in the UK is Prince Charles, the man who would be our King. Prince Charles’ support for CAP is partially self-serving, his estate receives millions of pounds in support from the EU annually. However, his stated reason for supporting the subsidies is that they prevent intensive farming. In other words, they keep smaller inefficient farmers in the UK in business while locking our more efficient farmers out.
Again, this is an opportunity for New Zealand to grab in the FTA negotiations: no farming subsidies to UK farmers. Kiwi farmers should compete on the same basis as the UK farmers. While we are at it, there should be a ban on food miles, that clunky mechanism for climate change that does not consider the carbon efficiency of our farmers. A “grandfathering” of the Overseas Experience visa perhaps. Or maybe we’ll get those things post-Brexit anyway.
This isn’t about getting back at the UK for 1973. It is, though, acting in our national interests at a time when it is opportune to do so. It’s been my view for some time that New Zealand’s free trade priority post the successful initiation of the (CP)TPPA is India. Aside from a common language, legal system and a lot of synergies in our booming tech sectors, a deal with India is geopolitically smart. It would provide an excellent counter-balance to our dependence on our two largest trading partners – Australia and China. Economically, the OECD expects India’s GDP to grow 7.5% this year. That is on top of a similar performance in 2018. At that rate, India will overtake the United Kingdom as the world’s 5th biggest economy sometime this year. Despite this, since John Key’s October 2016 visit to India there hasn’t been much progress. Our path to an agreement with India is not that clear.
Focusing on an FTA with the UK right now makes perfect sense. It’s our chance to grab changes we want to see.