New Zealand and the New EU

From an economics and trade perspective, the EU is a crucial market. Although New Zealand trade has diversified greatly from the days when most of NZ's agricultural produce went to Britain, part of that diversification has been to continental Europe. In the year to December 2002 the EU was New Zealand's second largest export market, taking $NZ4.8 billion or 16% of total exports. (Of this the UK took $1.45 billion and Germany took $NZ893 million). Australia was NZ's largest export market, taking $5.6 billion (19% of total exports). The US and Japan took $NZ4.6 billion (15%) and $NZ3.6 billion (12%) respectively. The EU is NZ's largest market for butter, sheepmeat, venison, wine, apples and pears, kiwifruit, wool, hides, skins and leather.

Risks and opportunities

There are risks and opportunities in the enlarged market for New Zealand. The opportunities are the same as they are for every exporter to the EU: a large market has grown and the acceding countries have had to conform to legal and financial practices which will make investment and trading much safer. The EU's restrictions on particular agricultural trade will cover more countries. The EU's requirements for certain forms of safety and labelling will be extended to those countries which join, but once an export is acceptable to the EU as a whole it will be able to pass the requirements of individual countries. Labour costs in at least some of the acceding countries are likely to be lower for a while than they are in other parts of the EU.

The risks are diverse. It is going to be harder for New Zealand, as it will be for other non-EU countries, to get the attention of EU ministers and officials. Because of New Zealand's small size, it will be harder for NZ than it will be for some others.

There is a risk that New Zealand will diminish in importance to the point that thinking about NZ will just not occur to many EU officials and politicians.

There is another significant risk because of enlargement. Some thousands of people from the acceding countries will take up positions within the EU institutions and there will be ministers from countries which have had very little indeed to do with NZ. Some of these will take part in decision-making which stands a chance of affecting NZ. In some cases, Poland is a point, the countries have huge agricultural interests themselves and will be anxious to sell more of their produce within the EU and in surrounding countries.

To have any influence in the enlarged EU New Zealand is going to have to be active in making sure that the country is not forgotten about and in other ways manage to bring itself to the attention of the EU.

The country will not be able to avoid the issue of more Ministry of Foreign Affairs and Trade staff representing NZ in Europe. Probably the most glaring example of under-staffing is in Germany. There are three policy staff seconded from Wellington to the third largest economy in the world and, moreover, through cross-accreditations they have responsibilities for six other countries: Austria, the Czech Republic, Hungary, Poland, Slovakia and Switzerland.

Influencing Policy

The problem for countries and special interest groups who want to influence EU policy is that the process has to be on several fronts. If Brussels were the only key to influencing the process an increase the number of NZ representatives in Brussels might suffice. It is not. Although New Zealand has to know what is in the drafts prepared by the European Commission and if possible influence them, it also has to try to ensure that the brief for national ministers written in national capitals reflects NZ concerns. By the time a national minister goes to Brussels, the policy of his or her government is set. The minister would not be in a position to seek changes to a brief already processed through his or her government's co-ordinating machinery. Moreover, once in Brussels the ministers usually have a schedule that is very busy. Their schedules will become busier still once the EU has 25 or more members. It is very difficult to re-open points in the meetings of the Council of Ministers.

Increasing NZ representation in Europe will not be the only step New Zealand will need to take to monitor and engage with the enlarged EU. It would be highly desirable to do so if all New Zealand's interests with the EU were political, security and public policy. Because of the country's trade interests the country has no other rational choice.

The previous text is an abridged version of an article by Stuart McMillan, previously published in the May/June issue, 2003, of the New Zealand International Review. The project on which the article was published was jointly funded by the National centre for Research on Europe, University of Canterbury, and the New Zealand Ministry of Foreign Affairs and Trade. Stuart McMillan is a research associate in the National Centre for Research on Europe at the University of Canterbury.