Selling NZ products in uncertain times

22 Feb 2019

Negotiations on the other side of the world are having a ripple effect in New Zealand. The controversial Brexit talks could affect us greatly.

With the UK Parliament’s rejection of the latest Brexit proposal, it’s possible the UK could abruptly leave the EU on 29 March.  If so, we’d feel the shock of a changed environment for trade.

The Brexit divorce underlines just how hard it is for New Zealanders to export profitably in a changing world.

The environment that results from Brexit will depend on the deal negotiated.

A hard Brexit with no transition raises particular risks for New Zealand food products as greater delays at customs and borders could harm perishable products - at exporters’ risk.

New Zealand lamb sales could be threatened if the EU imposes tariffs on British-grown lamb as this would mean more home-grown lamb available in the UK market and less demand for New Zealand lamb.

Changes to tariff rate quotas would also affect lamb.  Current EU quotas could end up being split between the EU and UK, reducing the flexibility of lamb sales currently enjoyed by exporters.  New Zealand has registered our concerns with the world Trade Organisation, seeking to avoid such a split.

New Zealand lamb could be the first to feel the brunt of Brexit as 29 March is very close to Easter - peak Northern Hemisphere time for lamb.

Wine could be at risk. The UK buys over a third of New Zealand’s wine exports and is by volume our biggest wine customer.  Increased tariffs after Brexit would dent the profitability of the New Zealand wine industry.

All New Zealand products currently exported to the EU will face uncertainty until the terms of the UK exit become clear.

However, other agreements apart from the actual terms of trade are in reasonable shape.

New Zealand and the UK recently reaffirmed agreements on mutual recognition of standards and veterinary and sanitary provisions that recognise the high quality of New Zealand’s food production standards, and this provides a baseline of certainty for food exporters.

Customs support is well developed.  New Zealand’s agreement with the EU on customs, supply chain security and risk management could be replicated with the UK.  NZ Customs have set up a customs counsellor at the NZ High Commission in London to support New Zealand exporters through the Brexit period.

Even in peaceful times the job of an exporter is a difficult one, with a lot of considerations to manage.  In the Brexit landscape those considerations are multiplied.

New Zealand exporters are advised to follow the news on developments in Brexit negotiations to be ready for likely outcomes.

Exporters will need to maintain good communication with UK customers and may need to find new business reps in the UK or EU.

Currency moves should be watched closely as Brexit could cause fluctuations in the pound.

Contracts should be reviewed, as current terms could become redundant and UK contracts that refer to EU law may need amending or renegotiating.

Data management will need to be reviewed, as UK suppliers will require extra protocols to transfer personal data from the EU.

Intellectual property - the key asset of all innovative businesses - will need continued protection throughout Brexit.  Exporters will need to ensure they have the right registration to take advantage of the automatic conversion of EU registered rights to national UK registrations at Brexit time.

New Zealand will continue to need quality free trade agreements. Current negotiations towards separate trade deals with the EU and the UK will reflect the eventual shape of Brexit and New Zealand exporters will be hoping for a deal that brings lower tariffs and more trade with both the UK and EU.