Agriculture could make gains as countries reconsider their protectionist measures in response to Trump’s tariff war.
New Zealand could benefit as countries with high barriers to agricultural imports reconsider them in response to United States President Donald Trump’s global tariff attack.
Protectionists around the world are rapidly reconsidering their policies as they line up to plead with Trump to drop tariffs against them, which he says are payback for trade barriers stifling US exports.
Strengthening trade ties to offset the impact from US tariffs is also now on the agenda for these countries.
Arch-protectionist France is reported to be considering dropping its opposition to a free trade deal between the European Union and the Mercosur block of South American countries. Twenty-five years in the making, the deal is opposed by French farmers concerned it will flood the EU with cheap Brazilian beef.
Adding to that momentum, Prime Minister Christopher Luxon has called for the 12 countries of the Comprehensive and Progressive TransPacific Partnership (CPTPP ) trade agreement to explore with the EU ways to “promote free trade as a path to prosperity”.
Luxon expected this could initially include action to prevent export restrictions and ensure any tariff retaliation in a trade war is consistent with global trade rules.
A Wellington insider said working with the EU to safeguard global trade rules could have other positive spin-offs for NZ agricultural exporters.
Beef and dairy exporters were left unfulfilled by the access to the European market of 450 million consumers achieved in NZ’s trade deal with the EU in 2022.
At the time it was thought it would be a generation before NZ could hope to negotiate an upgrade.
However, sitting down again with European trade officials could provide NZ an opening for revisiting the agreement much earlier.
“That is a wonderful opportunity to re-open the market access component although it might be one to two years away,” the insider said.
Dairy Companies Association executive director Kimberly Crewther thought it too early to tell if market access for NZ dairy exporters to the EU could be revisited.
However, the European Commission’s recent “zero for zero” offer to scrap tariffs on US industrial imports in exchange for the US doing the same for European industrial goods indicated a potential shift in mindset by the EU in response to Trump’s tariffs.
“If it is possible on industrial goods why not agriculture?” she asked.
“The same arguments apply.”
Lockwood Smith, who as a former trade minister and high commissioner to the United Kingdom has plenty of experience dealing with European protectionists, said farmers would welcome lower tariffs on NZ exports to the EU but he was wary of trade-offs.
These included CPTPP countries being asked to adopt the EU’s regulation-heavy approach to trade in exchange for improved access to its markets.
“What would be a shame would be to compromise CPTPP too much,” Smith said.
Former agricultural trade envoy Mike Petersen travelled with Luxon to Delhi last month to help revive trade talks with India.
Market access gains still look difficult, especially for dairy, Petersen said, but NZ’s negotiating position has improved since Luxon’s visit. Indian negotiators are now under more pressure to make progress after Trump announced a 26% tariff on imports from the country as part of his reciprocal tariff announcements on April 2.
“People are not sure what the trade environment looks like anymore so building a diverse range of markets is even more important today.”
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