European Union Ambassador to New Zealand Bernard Savage visiting the University of Otago this week. PHOTO: GREGOR RICHARDSON

There is no race between the European Union and the United Kingdom to negotiate and lock in respective free-trade agreements with New Zealand, but the EU is nevertheless quick out of the blocks.



With the contentious Trans Pacific Partnership Agreement negotiations back in the headlines, negotiation of the pending free-trade agreements between the EU and UK with New Zealand will be in for considerable scrutiny.



It will likely come as a surprise to many the main focus of the EU negotiations will be around the services sector, as opposed to traditional primary exports, the former being the slightly smaller segment of overall exports to the EU.

Bernard Savage was last year appointed Ambassador of the European Union to New Zealand, the first time there has been a permanent, resident ambassador in Wellington.

"The EU upgraded its mission here to have a fully accredited ambassador in place,'' Mr Savage said.

This week Mr Savage (58) has been travelling around the South Island, making himself known to established businesses, start-ups, universities and Chamber of Commerce representatives, with his last day in Dunedin on Thursday.

Scottish-born, he was keen to finally get to Dunedin, where he met representatives from numerous tech start-up companies, the University of Otago and Chamber of Commerce.

When asked if the EU saw itself in a race with the UK to secure trade deals, Mr Savage said even before Brexit - Britain's pending exit from the EU - became a household word, the EU was looking to a deal with New Zealand.

"We started New Zealand scoping before Brexit began,'' he said.

While being in a race with the UK "was not a consideration'', although Mr Savage hoped formal talks would begin in the new year and "can be completed as quickly as possible''.

He said a "key'' element to the talks would be the services sector, which includes technology, tourism, law, education, financial services and accounting, with a strong emphasis on deals beneficial to New Zealand small to medium enterprises (SMEs).

"The free-trade agreement [with New Zealand] will stand or fall on the benefits to the small to medium enterprises ... the big companies are already experienced in these deals for decades; some more than 100 years,'' he said.

"It's important we and New Zealand identify that now and know what obstacles may be in the way,'' he said of export issues the SMEs may face.

While the European Union is our third largest trading partner for exports, it is the top trading partner for imports for the year to June 2016, with imports topping more than $12 billion.

Trade is not just about sending primary produce to the European Union; pictured, a Maersk container ship being loaded at Port Chalmers in the early hours of the morning. PHOTO: STEPHEN JAQUIERY

Mr Savage said he had neither a dollar nor percentage increase in mind for the future.

The UK takes about 35% of New Zealand's exports; rising to 44% when services are taken into account, with the balance of trade across the 28 member countries of the EU.

Mr Savage's impression of meeting several tech start-up companies in Dunedin was positive - he noted not only that staff were represented by several nationalities but their potential market for their gaming platforms was global.

"Increasing trade for New Zealand and EU is not about the old-fashioned idea of goods on ships, but opening up the global value chain ... identifying those businesses which are able to add value,'' he said.

As an example of identifying different links in the global production chain, Mr Savage talked about New Zealand merino wool going to China for scouring, then to Italy for manufacturing.

He said the same New Zealand company was now looking at using less fine wool in an attempt to replace environmentally destructive microbeads, with a biodegradable product.

Examples of the expansion of the global value chain was Fonterra having purchased one of Latvia's biggest dairy companies, and a Fonterra dairy manufacturing company in the Netherlands was exporting to New Zealand.

Kiwifruit producer Zespri had also bought Italian companies and was now directly supplying EU markets, he said.

Asked about the strengths the EU could bring to negotiations, Mr Savage simply said the bloc was the world's biggest single market, with plenty of opportunities opening up.

While having an emphasis on the service sector, Mr Savage was not downplaying the importance of historical trades such as the sheep and beef trade.

However, he sounded a note of caution about the agriculture sector, arguably the most contentious as New Zealand and European farmers strive to maintain their respective market shares

"There will be [deal] criticisms from both sides of the agricultural sector ... disappointments on both sides,'' he said.

"[Ultimately] there has got to be increased market access for both sides,'' Mr Savage said.

Also for the agricultural sector there were tariff rates to be considered, but until negotiations started Mr Savage could only say they would be "folded into the discussions''.

"Ultimately, we want to make sure everyone's market access increases,'' he said.

Another issue Mr Savage tackled was the transparency of negotiations, as citizens worldwide become increasingly disenchanted with trade deals being struck in secrecy.

"A key issue has got to be transparency - to be honest, that's not been done so well in the past,'' he said.

He said the EU and New Zealand were "on the same side of the table'', when it came to climate change, environmental sustainability, human rights and research and innovation.

That was underpinned by having worked closely together in the past on security matters, maritime law and New Zealand's past role on the Security Council.

He joked that if New Zealand were closer to Europe geographically "it would be eligible for EU candidacy ... we're like-minded and share many objectives,'' Mr Savage said.

"The proof will be in the pudding; to broaden the spectrum of goods and sustainable jobs for everyone,'' he said.

Gross domestic product should increase for both New Zealand and the EU through free-trade agreements, he said.

"We don't see trade deals as intractable to climate change ... in fact they should in the end contribute to the Paris Agreement,'' Mr Savage said.

Outgoing British High Commissioner Jonathan Sinclair was in Dunedin in October, also looking to strengthen economic ties through a free-trade agreement.

Britain is aiming to formally leave the EU in March 2019.

Mr Sinclair told the ODT at the time no free-trade negotiations could begin with New Zealand until Britain left the EU, so it appears the EU has already stolen a march, with its hopes of formally opening discussions in the new year.

Mr Savage attended Strathclyde University and the Edinburgh Business School, was last based in Brussels as head of division for four Arab Mahgreb (north African trade alliance) countries; Algeria, Libya, Morocco and Tunisia, during the Arab Spring.

He was previously ambassador to Saudi Arabia and the European Commissions's Envoy to Iraq.

Previously, for five years he was EU ambassador to the Maldives and Sri Lanka, playing a lead role in Sri Lanka's peace process and nation rebuilding following its bloody 20-year-civil war.

From an economic perspective, Mr Savage was in the early-2000s involved in negotiations with future EU members and for regional economic integration with southern Africa.

simon.hartley@odt.co.nz

Trading up

NZ’s top three trade partners

Exports to, year ended June 2016

Australia $13 billion

China $12.1 billion

European Union $8.8 billion

Imports from, year ended June 2016

European Union $12.1 billion

Australia $11.3 billion

China $10.8 billion

• NZ’s top EU export commodity, sheepmeat, valued at $1.4 billion, up $111 million from a year earlier.

• For goods exports, the largest increases were to Germany, up $111 million, the United Kingdom up $78 million, and Spain, up $72 million.

• Services made up $3.4 billion of total exports to the EU, up $206 million from the previous year, with Germany up $72 million, to $812 million and the United Kingdom, up $48 million, to $1.5 billion.

SOURCE: STATISTICS NEW ZEALAND