As Britain awaits a new tenant in No 10 Downing St, some trade watchers fear the turmoil could have implications for the UK’s trade deal with New Zealand
New Zealand's free trade agreement with the United Kingdom could face delays in the wake of political chaos at Westminster, trade watchers warn, as the country faces criticism for "overselling" its post-Brexit trade deals.
British Prime Minister Boris Johnson has resigned after dozens of ministers quit in protest at his leadership following a number of high-profile scandals.
While the UK and New Zealand formally signed the free trade agreement earlier this year, the deal still needs to be formally ratified by both countries' parliaments before it can come into effect.
Former trade negotiator and diplomat Charles Finny told Newsroom he was concerned the “absolutely fantastic” trade deal would not go ahead in its current form, with any change of prime minister - or government - laying the grounds for a potential reexamination on the UK side.
“Obviously we’ve got chaos in the Conservative Party right now and we haven’t got our free trade agreement – or Australia hasn’t got theirs either – ratified yet by the UK parliament and there are still plenty of farmers in the UK who were pretty disappointed by the fact that their government was prepared to agree to complete free trade with New Zealand.”
Finny said he would be surprised if opponents could successfully cause the deal to be killed off, but delays in the ratification process were much more plausible.
“Obviously the sooner we can get that agreement in play the better.”
A spate of resignations
David Mundell, the UK’s trade envoy to New Zealand, was among more than 50 members of Johnson’s government to announce their resignations on Wednesday (UK time) in a bid to force a change of prime minister.
In a post on Twitter, Mundell said he was “very disappointed that the Prime Minister has not listened to the counsel of colleagues and stood down voluntarily in the interests of the country”, and had asked for another confidence vote to take place urgently.
“Clearly such views are not compatible with holding a Government role and accordingly I have stood down as UK Trade Envoy to New Zealand,” he added.
Exports minister Mike Freer also resigned on Wednesday, while foreign secretary Liz Truss and trade policy secretary Penny Mordaunt remain in post but are among the potential contenders to succeed Johnson in any leadership race.
Number 10 Downing Street announced Thursday night (NZT) that Johnson would be stepping down as Conservative leader. Yet despite backlash from many in his party, he insists he will stay on as prime minister until autumn.
While the UK deal won praise from Kiwi exporters, the reception from British industry was less enthusiastic.
When the FTA was signed earlier this year, National Farmers’ Union president Minette Batters said there was “extremely little” in the deal to benefit British farmers, while there would in time be no limit on the amount of sensitive goods New Zealand could export to the UK.
“I have consistently pointed out that the real risk to UK farmers, and longer term for people wanting to buy British food, from the government’s approach to trade deals is not the individual deals themselves but the cumulative impact of each deal when added together,” Batters said at the time.
In a hearing this week, Westminster's international trade committee pressed UK international trade secretary Anne-Marie Trevelyan on whether the New Zealand trade deal would provide sufficient benefits to the British people.
"We're very confident that our farmers have that level of protection, there can't be any sort of dramatic surge in numbers.” - UK international trade secretary Anne-Marie Trevelyan
Citing an initial estimate that the trade deal could increase the UK’s annual GDP by just 0.01 percent, committee chairman and Scottish National Party MP Angus MacNeil said: “That means that when we compare it to the damage of Brexit which is, what, 5 percent of GDP, you're going to need about 500 New Zealand trade agreements to make up the damage.”
The committee had also heard from submitters who argued the agreement could open up the UK market to “a significant number of cheaper imports in the future, with fewer reciprocal benefits for agrifood producers”.
Trevelyan, who opened her appearance by noting she had “no plans” to join the exodus from Johnson’s government, said the UK had prioritised trade agreements with New Zealand and Australia “not only because they're much like family in many ways as countries, but because they're critically important parts of the CPTPP” - the 11-nation Asia-Pacific trade deal the UK hopes to join.
The removal of tariffs in New Zealand would create opportunities for whisky exporters and other producers, while the UK had ensured there were “a very strong set of safeguards in place” to protect British farmers.
“We are very conscious, as is every country when you do an FTA, they have those areas where they need to have levels of protection...we've built that in so that we're very confident that our farmers have that level of protection, there can't be any sort of dramatic surge in numbers.”
Trevelyan told the committee the government was unlikely to trigger the ratification process for the New Zealand trade deal until the British summer recess, which runs from July 21 to September 5.
In a separate report on the UK’s trade deal with Australia, the committee warned the British government against “overselling” the benefits of trade deals, while also calling for a more thorough assessment of the winners and losers.
“The almost complete liberalisation of unprocessed agri-food trade with Australia is a significant step, especially given the UK’s strong defensive interests and minimal offensive interests,” the report said, noting British producers’ fears the UK could become a “fallback market” if international trade flows changed.
MacNeil said the deal would not have the transformative effects claimed by British ministers, with “multiple examples where the Government’s flat-footed negotiating has led to significant concessions being given to the Australians without securing all possible benefits in return”.
Trade and Export Growth Minister Damien O'Connor told Newsroom the Government expected the ratification process in New Zealand to be completed by the end of the year, and was confident the deal would not be derailed.
"Support for the agreement is broad-based in the UK and we don’t expect this to change."
