EU trade committee chair Bernd Lange argues the grouping's trade deal with New Zealand is a "gold standard" agreement - even if Kiwi farmers disagree. Lange spoke to Sam Sachdeva about China's coercive trade practices, cracking down on forced labour, and how the Ukraine invasion has changed attitudes on trade
Even a typically miserable Wellington spring day can’t shake the good mood of European parliamentarian Bernd Lange.
Speaking to Newsroom at the end of a week-long visit to New Zealand, Lange says the grey skies and rain remind him of his roots in northern Germany - although his cheer may be more down to the free trade agreement between the European Union and New Zealand he is here to discuss.
Lange visited New Zealand in late 2017 for a “fact-finding mission” with other members of the European Parliament’s international trade committee which he chairs.
“Now the circle is closed,” he says of his return visit, with committee members to talk to Kiwi politicians, businesses, and civil society organisations about the final agreement signed earlier this year. The mood of those discussions?
“Of course, there's big, big support [for] this deal: from the government party, from the opposition party, from civil society organisations, from the Māori community - because there's, for the first time ever, a specific chapter in the agreement - and also from business, with two exceptions.”
Those exceptions are notable: both the meat and dairy industries were highly critical of the deal when it was announced in early July, with Federated Farmers describing the outcomes as “considerably worse than we expected”.
“Negotiations are give and take, that's for sure,” Lange says, before offering a defence of the outcome.
“97 percent of products are now covered by zero tariffs, and for beef and dairy products it does not close the European market - it's still open…
“The market for this product inside the European Union is not unlimited…and therefore, I guess it's an illusion to believe that there could be a better deal for these two industries.”
Instead of complaining about the size of the quotas, he believes they should focus on “brand New Zealand” and target the high-quality, high-price end of the European market.
While there has been some grumbling from EU organisations like the European Dairy Association, there are unlikely to be any difficulties with ratification in Brussels.
“To think a small country, even a bigger country like Britain, is able to sail alone in this troubled sea – it's unbelievable and unrealistic.” – Bernd Lange
It helps that the FTA is an ‘EU-only’ rather than ‘mixed’ deal, meaning it requires only a vote of the European Parliament and not of each member state.
Lange says his committee is certain to recommend the FTA be passed, describing it as “a gold standard for future agreements” and citing its Māori trade chapter, as well as strong sustainability and labour provisions.
His hope is that the deal will be ratified by this time next year, if not sooner, with Russia’s invasion of Ukraine adding urgency to support for the global trading order.
There have already been reports of previous trade sceptics on Europe’s left changing their tone due to the war - something Lange has seen first hand.
“When the Russian aggression against Ukraine started, I was with a delegation in Mexico, and one member of the delegation who was really, really against trade agreements in general switched her opinion immediately after the war…
“Having stable, rule-based reliable ties to partner countries [and] the resilience of supply chains is important, and therefore, some political forces switch sides.”
Vladimir Putin’s invasion has only worsened what was already an unfriendly environment for global trade, with the focus shifting from forging new ground to stopping historical gains from being eroded.
“Sometimes I feel that I'm the last defender of the multilateral system, because at the end of the day, decoupling and re-shoring is really increasing costs,” Lange says before criticising the “illusion” of self-sufficiency.
“To think a small country, even a bigger country like Britain, is able to sail alone in this troubled sea - it's unbelievable and unrealistic.”
While his priorities include modernising the World Trade Organisation and signing bilateral agreements, he also believes in the need for defensive measures to guard against those trying to take the rules-based order backwards.
Trade coercion, forced labour in EU sights
In addition to new laws placing safeguards on public procurement and foreign subsidies, the European Parliament is working on a new “anti-coercion” tool allowing for countermeasures when one country is using trade to manipulate others’ political positions.
“Sometimes, trade and investment is used as a weapon: China is doing this against Australia, against Lithuania, but also other countries behave in the same way, so it is important also to have some defensive interest instruments and these instruments were missing in the toolbox of the European Union.”
There are still issues to be resolved around how exactly to define ‘coercive’ trade measures, as well as which part of the EU would be in charge of a final decision on any retaliatory response, but Lange is confident there is support for the policy in some form given the current environment.
While the bill isn’t explicitly aimed at China, there is a risk Beijing will take offence nonetheless, and the same could be said of plans for a new ban on products made with forced labour.
The US has implemented a specific ban on any imports from China’s Xinjiang region, citing concerns about Uyghur Muslims being forced into job programmes.
Lange says the European Parliament wants a broader law, covering not just imports but products produced within the EU (with some European countries already dealing with allegations of slave labour).
“We are really discussing a quite broad approach inside the European Union. This is important, to make clear to trading partners worldwide, that we are not discriminating against anybody, we are looking just to the risk of forced labour.
“It might be that forced labour is also used inside the European Union, nobody knows, so even this has to be in the focus of such legislation.”
Lange has also talked about an EU-Taiwan trade deal - something which would likely prove a sensitive issue for China given escalating tensions across the Taiwan Strait.
“We are sticking to the One China policy, no doubt about that,” he is quick to declare.
“We have an agreement on investment concluded with China which is now deep in the freezer because of the political situation and nobody wants to open the door - but this is the frame for possible talks with Taipei and Taiwan.”
Such talks may be a while away, given other pressing priorities, and it is New Zealand’s own trade deal which is at the front of his mind for the time being.
