The long wait for exporters for a Middle Eastern free trade deal looks to be nearly over.
Frustrated by the Gulf Cooperation Council’s (GCC) refusal to finish a deal largely completed in 2009, the Labour government in September last year began exploring the possibility of a separate agreement with the United Arab Emirates, the second largest economy of the oil-rich club’s six members.
Formal negotiations began under the National-led government in May, and after just two rounds of talks, an agreement is now in sight.
Trade Minister Todd McClay picked up where officials left off when he met his opposite number in the UAE on his way home from the G7 meeting of trade ministers in Italy last month.
“There are just a couple of issues where each side has a different approach to things, where ministers engaged to find a way through,” McClay told Farmers Weekly.
“We have mandated negotiators to pull out all the stops and I am optimistic we can get there by the end of the year.”
McClay said there is nothing to suggest market access for dairy and meat will prove to be stumbling blocks for the UAE as they so often are in New Zealand’s trade negotiations.
“It is approach and language rather than anything significant.
“In some cases we have been able to say we can accept some of the way they do things and others ours or let’s look for new ways.”
While its population of 10 million people is not large, significant oil revenues and earnings from its sovereign wealth funds make it the 19th richest country on the planet on a per-capita basis.
Exports to the UAE from NZ rose 8% in 2023 to $1.04 billion, dominated by dairy products.
Dairy Companies Association of NZ executive director Kimberly Crewther said the UAE is the industry’s 10th largest market.
Tariffs on dairy imports are bound at 5%, which if applied across the $744 million of dairy products imported into the UAE in the year to March, would have cost exporters $34m. The actual level was likely to be lower, however, as the upper limit was not applied to all products.
Crewther said while the UAE’s dairy tariffs are low by global standards, it would be valuable to formally lock these in at zero.
Meat exports to the UAE were $47m in 2023, making it the second largest GCC market after Saudi Arabia.
Of this, $31m was chilled beef, making the UAE the fourth largest market globally for the high-value category behind the United States, China and Japan.
Chilled beef and lamb currently pay no tariffs, and it is hoped the impending free trade agreement will extend that privilege to frozen beef and lamb, according to industry spokespeople.
The UAE has signed a dozen free trade deals since 2021, five of which are already in force.
This is in contrast to the GCC, where progress continues to be slow going.
Negotiations there have resumed but McClay said there is no certainty of success.
When he was in Opposition, McClay blamed the Labour government for inserting its sustainability-focused Trade for All objectives into the negotiation for stalling talks that had first begun in 2007.
McClay’s predecessor, Damien O’Connor, rejected the claim, saying GCC kingpin Saudi Arabia’s growing ambitions for its own dairy industry were behind the club’s reluctance to complete a deal.
McClay most recently met GCC ministers in May. He said dairy self-sufficiency wasn’t raised with him.
“It is not an issue that has been raised with me but there are a number of things they want to produce that we will be sensitive to as is always the case.
“One or two of the countries do have a dairy industry of sorts but ultimately the others do want to import so it is just a matter of the GCC getting the balance right.
“It is more than 17 years that we have been talking to them and I just said to my negotiators and their ministers that we should put every effort into concluding and if we can’t then we shouldn’t waste any more time on it.
“But I am optimistic at the moment because both sides are looking for solutions to any issue they had as opposed to sticking to their positions.”
