New Zealand, Australia ready to accelerate trade talks with the EU, ditch ISDS

The EU has agreed to launch negotiations with New Zealand and Australia. The two countries are ready to speed up talks, and reach a deal in a reasonable timeframe.

“We don’t come to the negotiating table with a template or a model,” Australia’s Deputy Secretary, Justin Brown told EURACTIV in an interview.  “We come with a pragmatic outcome in mind, with a package of benefits that will be good for both parties.”

New Zealand and Australia launched talks with the EU in October and November, respectively. According to analysts, there is a one trillion plus euro blind spot in the Asia-Pacific region linked to the GDP of the two countries.

Moving ahead with Wellington and Canberra is a no-brainer, as the Transatlantic Trade and Investment Partnership (TTIP) with the United States repeatedly hits roadblocks.

>> Read: EU urged to launch trade talks with TPP countries, starting with New Zealand

The European Commission is expected to start and complete the scoping exercise and impact assessment in 2016, and negotiations could start in 2017.

While this formal process goes on, trade representatives are keen to accelerate reaching informal understandings.

Regulatory brothers

“There are some historical sensitivities […] but there are very few countries in the world that are so aligned to European thinking on questions like labour rights, environmental standards, sustainable development, making regulations with SMEs in mind,” said New Zealand's Trade and Climate Change Issues Minister, Tim Groser, in an interview with EURACTIV.

The recent EU trade strategy published in October by Commissioner Cecilia Malmström proposes a number of innovations which New Zealand is ready to endorse.

“We are a policy-taker, not a policy-maker,” added Groser, emphasising that there is no other country better suited to developing new thinking than New Zealand.

Even though there is as risk of comparing trade talks between like-minded partners, such as the United States and Canada, the two Pacific countries are not in the same league, the trade representatives said.

Beyond tariffs, the deal will include chapters on regulatory cooperation. “Regulatory coordination is a completely different scenario to TTIP,” Brown insisted.

Australia and New Zealand because of their historical UK upbringing have a mixture of US and European regulatory structures and that should make it easier for negotiators to come to a compromise.

“The US clearly has a number of objectives. We come to the table with straightforward propositions. We want to make a seamless environment for our businesses, both domestically and abroad in order to maximise revenue,” Brown said, explaining that the overall package needs to be a win-win.

On the same wave link, New Zealand favour a system of mutual recognition, which already exists to some extent in the agri-business, but they would like that to go across a number of sectors. “It depends on how ambitious Europe wants to be. It depends on whether they want to covert the ideas form their Trade for All strategy into concrete models,” Groser said.

Beyond sensitivities

In a hearing in the European Parliament last week, MEPs and EU stakeholders have highlighted possible contentious issues, specifically, agriculture and investor-state dispute mechanism (ISDS).

“The sensitivities on the European side are all about perceptions of history,” Groser said, arguing that the agricultural world has totally changed, and the EU Common Agricultural Policy has adapted.

New Zealand and Australia will not swamp the EU market with milk and meat, as is feared.

“The traditional perception is that agriculture is all a problem for Europe. But the reality is very different. Europe is the world’s largest agricultural exporter, and it is making great inroads into the Australia and New Zealand market for agricultural products, because they are the most sophisticated and highest quality products in the world. And the consumers love them! They love all these strange Italian pastas and French cheeses,” Groser conceded.

New Zealand has changed its policy on geographical indication (GIs) in advance of the negotiations, setting up a register in order to remove potential barriers that would slow down the talks.

More than traditional trade, much more is happening at investment level.  There is significant French investment in the New Zealand wine sector, while New Zealanders invest in the French dairy sector. The same is happening in horticulture—with kiwis and apples, with France and Italy.

Open-mind on ISDS

As far as ISDS is concerned, Australia and New Zealand trade representatives are open-minded.

The contentious arbitration system has derailed TTIP trade negotiations, and now the Commission has proposed a special court to resolve disputes.

>>Read: Commission proposes public court to settle investment disputes

New Zealand is open-minded. “If Europe wants to move down a more open, transparent process, we can follow,” Groser said, going further saying that New Zealand would do without ISDS altogether.

“When we got to ISDS in the TPP talks, for example, I and the Austrialian minister reached a private agreement right at the start that we would not use it between ourselves […]. This is how pragmatic we are.”

Pragmatism will certainly be the underlying element of the negotiations between the EU and the two Pacific partners, but also common sense.

“We are on the same wavelength,” ended Brown. “Neither of us wants a backlash. We share too many common values and I don’t expect this agreement to be as hot topic as TTIP has been.”