New Zealand’s Preferential Access to EU Single Market

New Zealand’s Preferential Access to EU Single Market

Introduction

The European Union is a well-established regional body that has become a major point of reference to the other regional bodies. It has come up with various strategies such as the Commercial Policies that could help it with the relevant market relationships with other countries and regional bodies with similar trade interests. Since it opened its trade relationships with other countries and regional blocs, the EU has receive several application from various countries that seek to enter into trade agreements with the countries[1]. This paper shall seek to give a comprehensive legal opinion to the Government of New Zealand on the aim of the Country gaining a preferential access to the Single Market in the European Union. The opinion will give the relevant ideas that will result to a frictionless trade deal that will enhance the relationship of New Zealand and the EU. New Zealand initiated the talks to enter into a preferential trade agreement with the EU in May 2018. The application was adopted then and so far there has been seven negotiating rounds to that effect[2].

The EU Single Market

The single market is a regional strategy that allows free movement of goods, services, labor and capital within a specific geographical location. It is a strategy that the members of the region will utilize to ensure that they effectively advance their economic interests. The European Union protocol allows for the members to enjoy a free market in the areas identified above to allow them give preference in the regional goods. However, the countries and the region at large are also allowed to enter into other regional blocs and countries that wish to engage with it in matters of trade. The Single market is also guided by the provisions of the European Economic Area which recognizes the bilateral treaties between the EU and other countries such as Switzerland and the UK through the BREXIT which allows such engagement in the transition period.  Other countries have come up with agreements that allow them to engage with the EU in the single market on certain areas of trade[3]. The agreements only allows the countries to enjoy limited scopes in trade. In addition other agreements such as the Deep and Comprehensive Free Trade Area has also allowed some limited access to the EU single market in specific sectors[4]. A similar limited market access is also realized in the engagement between the Country and the EU.

Meaning of gaining access to EU Single Market

Preferential access to the EU single market means the ability to access the European Union market in regard to specific goods and services. Majority of countries refer preferential trade agreements that allow them to engage in trade with the European Union on the specific goods that the country imports or exports. A professional trade agreement can be established by a country entering into a trade pact with the European Union it is a major step of economic integration that creates a free-trade area between the parties into the agreement. Preferential access to the EU single market shall give New Zealand certain trade privileges that shall enable the country to grow its economy scale. The implication of the agreement is that the country shall enjoy a standard zone of trade of the specific goods encompassed in the agreement. As indicated, the European Union single market creates a cordial relationship between the countries and shall allow enjoyment of various market services such as movement of goods, services labor, and capital[5].

The entry of New Zealand into a trade agreement that will allow a single market on particular goods or services will enable the country and the EU to enjoy all the rights and privileges that may be enjoyed by any other country that is accessible to the market. For instance, the single market may enable free movement of people and goods from the parties to the agreement if the agreement stipulates so. There shall also be limited obstruction on the borders on the import and exports, there shall be limited tariffs and non-tariff barrier between New Zealand and the EU on all the goods that move between the two. It is for that reason that New Zealand should have a good understanding of the legal implication of entering into such agreements with the EU[6]. The implications may be driven from the world trade organization protocols and other international trade practices which are standard in any trade agreement that is entered between different countries.

Preferential Trade Agreements

Any trade agreement that establishes a single market is facilitated by a preferential trade agreement. A preferential trade agreement may be defined as special trade relationship between two different countries.  The PTAs guarantees unfettered market access between the agreeing countries over the specific goods and services. The agreement aim at establishing agreed mutual benefits that will aim at building the market relationships between the respective countries that enter into it. It creates the special terms that will be applied in the course of business transactions of a goods and services between the two countries[7].

Existing Literatures on the EU- New Zealand Trade Agreements

Different scholars have written about the potential relationship between New Zealand and the European Union when it comes to trade agreements. Specific attention has been put on the European Economic Community and how it impacts on trade relationship with New Zealand.

The entry of Britain to the EEC was a marked a notable event in New Zealand because of it restricted preferential access of its agricultural goods to the European Economic Community market[8]. The discussion was further expanded buy Saunders J, Saunders CM, McLellan B, Obadovic I, Driver in their book in which year give an intrinsic examination of the relationship between Europe and New Zealand. She highlights various steps that the government of New Zealand took in order to reinstate its access to the UK market and also elaborates on the various challenges that were first in the process. She relates the impact of power of politics that played a major role for New Zealand in securing access of market on its dairy products in the UK and you at large. Ship loaded the New Zealand diplomats that applied various techniques of a successful diplomatic mission in order to achieve the best in the negotiations between New Zealand and Europe[9].

The trade relationship is father discussed by Beladi H, Choi K, in their analysis of the trade relation between New Zealand and the EEC on other products other than agricultural goods. Specifically they addressed the issue of manufacturing products offering services and other trade investments that were advanced by citizens of New Zealand in the Europe. They also advanced a discussion that informed on the changes that had been seen to affect the relationship between the EU and New Zealand. It is such challenges that the government of New Zealand must consider in its bid to create a single market with the EU over certain goods[10].

 

The agreement in the Doha world trade organization round enabled countries such as New Zealand to enter into bilateral and plurilateral trade engagements with other countries and regional blocks to enhance globalization and liberalization of trade in goods. With expansion of market the same has been extended to services labor and capital. New Zealand stands a good chance to enter into trade agreements with the EU because just like the EU its name it’s economic space to the global level[11]. The countries have engaged in a variety of negotiations such as the Doha round negotiation of 2001 to utilize the WTO provision on bilateral and multilateral agreements. However the two have not reached consensus on a number of issues pertaining accessibility to the European single market it is for that reason that New Zealand applied in May 2018 to enter into trade agreements with the EU attaining a variety of preferential trade areas. It is also important to note that in September 2017 the European Council made a recommendation that directed the commencement of negotiations on a free-trade area in the European Union and New Zealand[12]. Before the completion of the negotiations and effective commencement of the agreement the trade relationship between New Zealand and the EU is currently governed by the principle of the most favored nation that is provided for by the general agreement on tariffs and trade. It is worth to note that a successful negotiation of a preferential trade agreement between New Zealand and the EU will be of great significance to the economic development of New Zealand and it will deserve to satisfy the priorities of its economic and diplomatic strategies.

Other preferential trade deals that have been discussed by scholars include the agreement regarding the trade in butter between the UK (Singleton and Robertson, 1997). The agreement was based on the terms of the Ottawa agreement and it’s of the significant impact to both countries especially the exporting country, New Zealand. The discussion has also been advanced by (Davenport 2004) who gave examination of New Zealand’s but export the EU. It explains the change of trade patterns upon Britain’s ascending the EEC. According to the author the trade relationship could not be maintained between New Zealand and the EU market especially in the export of wool and other related products.

Recent Trade Relationships between New Zealand and the EU.

The European Commission, 2017 report indicates that New Zealand was the 48th largest trading Partners in goods with the European Union in the year of 2016. The trade relationship been on the rise in the following years since the report was issued. That is a clear indication that it would be of more significance if New Zealand enters into more preferential trade access with the European Union especially on the goods that a single market has not yet been created on.

The recent data indicate that there has been a cordial trade relationship between New Zealand and the European Union’s especially on import and export of agricultural goods like meat and butter the New Zealand statistical reports indicate that the export to the European Union market has been a major boost to the economy of the country. Despite the adult relationship that has existed between the two countries, this paper notes that the challenges that have been there such as tariffs. Other regulatory norms have been a major setback in a number of their trade relationships. It is for that reason that this paper gifts a holistic legal opinion that will govern the country of New Zealand in its bid to create preferential access to more goods and services in its bid to strengthen its trade relationships with the European Union[13].

The Procedure in Negotiating a Preferential access the EU single market

In its bid to expand its trade ties with the European Union, New Zealand may utilize various forums and opportunities in order to do so this section explains the various methodologies that the country may utilize in order to create more preferential access to the European single market.

1. Entry through the European economic agreement.

As indicated above the European economic agreements, provide for various regulations that may be established through treaties and legislations to govern the market rules in the European Union. The rules such as common market rules allow the free movement of people and goods and essential services such as those related to help employment and labor in and out of the European market. The other the areas that are regulated by the EEA services such as consumer services environmental and transport services and other relevant intellectual property rights. It should be noted that other than the EEA rules other in WTO rules and international accepted standards shall be applicable in the regulation of the single market agreement.

2.  Entry to the European Union membership

It is a requirement of the European Union that before a country enters into a trade agreement leave the EU it must comply with the various protocols and rules as stipulated by the European Council. It is therefore imperative for New Zealand to be informed of the various rules and criteria that the European Union considers before admitting any country into a trade agreement. The Criteria is referred to as the Copenhagen Criteria. In a nutshell the government of New Zealand should demonstrate its ability to apply a strict rule of law to observe democracy, to show ability to participate in a free market, end to be willing to apply the European Union financial strategy of using the Euro in their economy[14]. New Zealand will also be obliged to make a membership application before the council for its strict assessment before further negotiations are allowable. The steps might have been succeeded by New Zealand which is now awaiting its eighth round of negotiations with the European Union. Should also be noted that the European Union place a significant role in the in the facilitation of the negotiation processes. For instance it offers technical financial and administrative support to the country with which it is entering in an agreement with.

This legal opinion aims at providing a frictionless trade agreement between the two countries, pay for that reason that it advises New Zealand government to have a good understanding of the requirements that the European Union has tablets before it admits any country into a single market negotiation. It is for that reason that the European Union will always need the consent of the negotiating countries government the trade agreement to take effect[15]. That enables the government to identify any issue that may cause friction in the course of the implementation of the trade agreement.

The Government of New Zealand must act with due diligence follow all the procedure and criteria outlined in the relevant instruments that will govern the negotiation process between the country and the European Union. It is important to do so because the ultimate outcome shall strictly bind the country into legal obligation. In the exercise of due diligence New Zealand government must first of all have a preparation stage in which the government will identify specific area of trade that the two countries will prefer to start. In doing so the government must also consider all the possible ramifications that may be associated with such trade deals and of what actually benefit it will cause. Upon full consideration of the preparation stage the government will then identify its officials to commence negotiations with the European Union[16]. The representatives shall be liable to report any progress of the negotiation to the government of New Zealand, specifically the president and other relevant officers. Once an agreement has been reached it gets the finalization stage for actual ratification by the two countries. The finalization stage shall include various stakeholders that will analyze and advise the government on the legal implications of such agreement that is entered. They comprehend all the terms of the agreement to ensure that none of them will bring difficulties in the actual implementation. Once approved the process of ratification commences through the parliament of New Zealand. A good preferential trade agreement shall be that which is clear, simple and understandable and which is likely not to bring any controversies in the cause of implementation. It should also indicate with clarity any form of dispute resolution that need adoption by the two countries in case a disagreement arises. The parties may agree that in case of a dispute they shall resolve to the WTO dispute resolution mechanism which is controlled by the dispute settlement body.

 

Legal Impact of a Preferential Access to The EU Single Market

The government of New Zealand should be aware of the possible implications of such a deal. It should be noted that part of the agreement is that New Zealand shall accept a number of the European Union rules and all other terms that shall govern the New Zealand – the EU trade terms. It will also have to wave a number of market practices such as tariff and non-tariff barriers all the goods that will be exported or imported between the two parties in the agreement.

Entry into a preferential trade agreement with the European Union will also impact on the manner in which the government of New Zealand can engage in trade discussions with any country in Europe or the European Union itself. Now that it is not a member of the European Union New Zealand will have to negotiate its trade deals through the EFTA. Similarly since it’s not bound by all the EU rules of practice the government of New Zealand may opt to exempt itself from application of certain rules that bounce the European Union countries. It will still remain under strict obligation to implement all the ordinary rules that will have been entered into to govern the trade relationship between the two. The other way in which New Zealand will have an obligation to respect and apply the rules of the European Union single market is when there will be a collective decision by the non-EU members engaging in a single market trade agreements with the EU, New Zealand will be one of them and it will not serve at an exemption. It is also imperative to note that once it enters into the Agreement, New Zealand will not solemnly have the discretion to select on which laws of the European Union that they will apply because it shall be bound by the terms of the agreement.

One of the laws that new Zealand must be prior to is article 28 of the EEA and Article 45 of the Treaty for the functioning of the European Union. The provisions provide that a country entering into a single market agreement with the European Union shall allow any citizen from the European Union to access its borders and enjoy labor services. That means that such members shall be considered just as citizens of New Zealand in case of any job competition and selection of workers. The same also mutually applies to New Zealand citizens who visit the European Union in search for jobs. The explanation of the implication of the loss is that the government of New Zealand shall not restrict movement of people coming into New Zealand in search for job opportunities. However when they come to New Zealand they shall be subjected to the laws of New Zealand indiscriminately[17]. The relevant authorities shall be bound to monitor the entry of such persons to avoid any illegal entries. The other stage of integration is the Common Market and Customs Union which is also expanded by the non-discrimination. In that regard all tax duties and tariffs shall be waived on imports and exports as per the terms of agreement.

The other legal implication that must be understood by the government of New Zealand is that which reflects requirements for labelling of products indication of all the necessary product requirements. Article 34 of the Treaty for the functioning of the European Union requires that all consumers shall be protected by being informed of all the products that they are being supplied that therefore means that labelling is a fundamental practice that must be adhered to by any country participating in a common market.  The same was propounded in the case of Rewe-Zentral AG vs Bondesmonopol[18]that involved Germany. Germany regulations required that any hard drink that is manufactured in the country must have 25% of alcohol. From the case it was established that this is a gross violation of Article 34 of TEFU. Such a requirement is likely to impact on any imports from any other country like it was seen in that case for the goods that had been imported from France and which held alcohol content of below 20%. To acknowledge the importance of labelling of products the court stated that when the products are correctly labelled based on their content of alcohol the consumer is likely to properly identify the products[19].

Product standardization is the other element that the government of New Zealand must understand that it will be influenced by its entry into the common market practice with the EU. That is to the fact that all the common rules and the terms of agreement must be applied and followed. All the products that are produced within the jurisdiction of New Zealand with an intention of being exported to the European Union must therefore meet all the necessary standards that have been set. The EU standard shall therefore be the point of reference on all the products that may be allowed to be exported or imported between the two countries and any contrary alignment with the requirement shall be dealt with through a mutual negotiation between the two countries[20].

The Responsibility of New Zealand

New Zealand shall be responsible to control all the private actors that shall act in New Zealand. The same issue was deliberated in the case of Commission v France[21], which concerned agricultural products that came from Spain and Belgium. In the case, agriculturalists that were based in France were reported to disrupt the entry of the consignments that were imported from the above two countries the consignments included that of strawberries and tomatoes from Spain and Belgium respectively. The state of France was responsible for the actions of the agriculturalists because it was bound to control its people from disturbing any practices of the single market. The guarantee is provided for under article 36 of the Treaty for the functioning of the European Union which guarantees policy security and ethical conduct that will be aimed at protecting both human being animals and all other agricultural products[22].

Application of the WTO Rules

Besides the times of the PTA and the rules of the European Union on establishment of single market new Zealand must also be aware of the rules of the World Trade Organization that regulate the creation of free trade agreements between countries or regions. The WTO is mandated to make and implement rules and guidelines that regulate different countries that enter into trade deals. It is charged with various responsibilities that includes dispute resolution in case such countries failed to agree on specific issues. The WTO protocols allow member countries to enter into preferential trade agreements which will establish free trade areas that would enhance global trade. The WTO is an independent body which aims to protect all the rights of the member countries that intend to enter into a trade agreement so that no country is discriminated or outsmarted due to its low influence in the global economy. The rules and guidelines of the WTO are central and applicable to all member states across the globe therefore making it necessary for New Zealand and the European Union to be prior to the terms of the WTO in case they enter into a Free-Trade Area meant in regard to specific goods. For instance the agreement must expressly indicate the kind of goods that will be preferred in the publishment of a single market between the countries. It shall also expressly indicate all other conditions that relate to custom administration, removal of tariffs and non-tariff barrier and any other practical allowances that shall be allowed in the course of the practice of common market in the single market area[23].

Conclusion and recommendation

The foregoing discussion indicate the efficacy of any country getting into a trade relationship with the European Union in order to strengthen their economic and even diplomatic ties. There are a number of advantages that are associated with such an agreement that will create a single market. It will enhance free Market and movement of goods and services between New Zealand and the European Union. This opinion therefore recommends that the government of New Zealand should have idea of the process to expand its engagement terms with the European Union that will foster creation of a single market in other good other than the ones enjoying the practice today[24]. In doing so it should be prior to all the legal requirements under the WTO  the EU and the national legislation to ensure that all the free trade agreements enter to a single market shall be of mutual benefit the government of New Zealand  and the European Union itself.

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