Agri-environmental policy and market developments in the European Union and their potential impact on New Zealand trade

Abstract

The developments in the European Union and its environmental policy have important implications for New Zealand. While the importance of the European Union as a market for New Zealand produce has diminished, it is still significant, accounting for 17 per cent of exports (6 per cent of which are to the United Kingdom), especially as a high value market and in commodities such as sheepmeat, fruit and dairy. It is because of the importance of primary products in New Zealand's trade with the European Union (hereafter, EU) and the fact that much EU environmental policy intervention and market changes are in the primary products sector that this paper will concentrate upon EU environmental policy and its impact on agriculture. The implications of changes in the EU on New Zealand are both indirect and direct. Indirect impacts include the influence the EU has in the outcome of World Trade Organization (WTO) negotiations, particularly in relation to agricultural trade, which of course is of vital importance for New Zealand. Policy and market changes in the EU also affect New Zealand indirectly by impacting on other potential New Zealand export markets. Direct impacts of changes in the EU include the rise in demand for produce produced in an environmentally friendly manner (henceforth referred to as 'green' produce) particularly at the high value end of the market. Other important factors include the continuing access for New Zealand exports to the EU market especially under preferential arrangements.