New Zealand's free-trade future

Near universal acceptance has greeted the news free-trade negotiations between New Zealand and the European Union are about to start in earnest.

Trade and Export Growth Minister David Parker is proving to be a trade dynamo for the Labour-led Government, perhaps even surprising his colleagues and opponents alike in just how successful he has been.

Mr Parker deflected praise to Prime Minister Jacinda Ardern, whose advocacy for New Zealand's trade during her recent trip to Europe tipped the balance.

As most know, the real deals are done by ministers like Mr Parker. Relationships formed between trade ministers and officials play a large role in the successful completion of deals.

An acknowledgement must also be made of the work carried out by National's former trade minister Todd McClay, who positioned New Zealand well in the Trans Pacific Partnership negotiations. The TPP was overtaken by another agreement, but the basis had been put in place.

Negotiations will begin later this year. From there, a free-trade agreement is likely within two to three years.

The potential gains for New Zealand from an EU agreement are significant. The EU, excluding the United Kingdom, is New Zealand's fourth-largest trading partner, having an annual two-trade of about $16 billion.

Our largest EU exports by value include meat ($1.1 billion), fruit ($555 million) and tourism and education ($1.3 billion).

Export shares for dairy and forestry are low and there is an opportunity for these two export sectors to diversify their export mix into the EU.

The EU is also a key source of goods imports for New Zealand, being the second-largest after China. Specialty cheesemakers say the EU deal will hurt them, as the domestic market is already being flooded with tariff-free, cheap, subsidised specialty cheese.

There will be other areas of commerce where New Zealand manufacturers find themselves at a disadvantage. In a free market, it often comes down to quality over quantity. EU farmers are subsidised, but so too are many others around the world - including trading partners Japan and Canada.

New Zealand is able to compete by providing quality products, not only commodities. It is unreasonable to expect tariff-free trade for all agricultural products.

As United States President Donald Trump continues to toy with trade bans, shoring up New Zealand's trade ties is becoming increasingly important.

The UK has assured New Zealand it is one of the first in line to secure an FTA once Brexit is complete. Completing an agreement with the EU, before Brexit, is a major milestone.

Any agreement with the EU will provide a modest counter to the rise in global protectionist rhetoric seen recently. It also should provide a modest lift to New Zealand commodity prices.

At the start of the negotiations, New Zealand will release a package of information outlining its negotiating priorities for the agreement and how the Government will engage with New Zealanders as negotiations progress. New Zealanders were, in the past, rightly indignant about being kept out of the TPP negotiations - asked to accept the agreement was in their best interests, without any proof.

Mr Parker's different tack has attracted less criticism from seasoned anti-trade protesters.

Apart from the obvious benefits for agriculture, technology, tourism and high-value manufacturing, proponents of the EU agreement see it as the start of ``next generation'' trade. These issues include the environment and sustainable development, the digital economy, and how to enable small businesses, women and indigenous communities to participate better in trade.

EU trade commissioner Cecilia Malmstrom's arrival next month will show how quickly New Zealand is cementing itself as a key partner for world trading blocs.