New Zealand may hold the key for post-Brexit Ireland

Posted by On 9:20 PM

New Zealand may hold the key for post-Brexit Ireland

Brexiteers might not deem it a parallel befitting their wildly inflated sense of national self-importance, but the UK’s best hope is that Brexit turns it into a New Zealand of the north Atlantic.

New Zealand suffered a similar shock in the early 1970s to the one the UK will shortly experience, when overnight it lost preferential access to its biggest trading market. That market was Britain, of course, and the cause of its closure was the UK’s accession to the European Economic Community. In 1961, when London first flagged its intention to join the EEC, the UK took about half of New Zealand’s exports â€" roughly the same proportion to the EU’s share of British exports today. Britain took the vast majority of New Zealand’s agricultural products, but the UK’s membership of the Common Agricultura l Policy would wipe out most of that bilateral trade. New Zealand would be “ruined”, its then prime minister, Keith Holyoake, warned his British counterpart, Harold Macmillan.

The collapse in UK-New Zealand trade was just as severe as many feared

Far from it, it turned out. Through some deft diplomacy and skilful negotiation, Wellington effected a trade policy coup. A free-trade deal with Australia, signed in 1965, gave a big lift to manufacturing exports. Having negotiated access to the beef markets in Japan and the United States, food exports to those two countries took off. The combined effect was that, by the time the UK actually joined the EEC in 1973, it took only 25 per cent of New Zealand’s goods exports.

Special arrangement

With London committed to doing what it could to protect New Zealand’s “vital interests” during the accesssion process, Wellington and the EEC reached agreement in 1971 on a special arrangement for New Zealand’s butter, cheese and lamb sectors â€" all vital parts of the national economy. The deal was for a limited period, but it softened the initial blow and gave New Zealand the time to diversify its trade. It used that time to seal trade deals with China and South Korea.

The collapse in UK-New Zealand trade was just as severe as many feared. In 1960 Britain took 53 per cent of New Zealand exports; by 2007 it was 5 per cent. And that dip could hardly have come at a worse time, coinciding as it did with the oil shock and fluctuating commodity prices. But the damage was offset by a whole set of new trading relationships.

With Brexit, London is turning its back on its neighbours

This is the Brexiteers’ dream for Britain. But even though the British economy is in better shape than New Zealand’s in the 1970s, it will be a difficult feat to emulate. When New Zealand faced the imminent closure of the British market, it turned to its neighbours, and to markets it could reach more cheaply and more quickly. With Brexit, London is turning its back on its neighbours, and on the biggest free trade area in the world, in the vague hope that it can strike bilateral deals with faraway countries that are comparatively difficult to trade with (including New Zealand , as it happens).

Important lesson

In the 1970s, a jilted New Zealand benefited from London’s feelings of guilt and kinship in securing deals and favourable terms, not least with the EEC. In the Brexit talks, European sympathy with the rudderless, chaotic Conservative government in London is in short supply.

The New Zealand experience carries an even more important lesson for Ireland, however. With the loss of its biggest trading partner in 1973, Wellington performed a full-scale strategic shift eastwards. Look where it struck trade deals: Japan, the US, China, South Korea. Economically, New Zealand became an Asia-Pacific country. These days, the states of the Asia-Pacific Economic Cooperation group, which includes China and Australia, buy 72 per cent of New Zealand’s ex ports. Today, China is easily the biggest buyer of New Zealand goods.

Our trade dependency on the Anglosphere reflects a lazy neglect of the potential that lay on our doorstep

That economic integration has in turn contributed to a broader “Pacific pivot”, because tighter economic ties have brought people closer together, through increased travel connections and business relationships.

Lazy neglect

Just as for New Zealand in 1973, Brexit is an opportunity for Ireland to integrate itself seriously into the European economy on its doorstep, and to take the imaginative and cultural leap that never quite happened in the decades after accession. Our trade dependency on the Anglosphere reflects a lazy neglect of the potential that lay on our doors tep; almost half a century after EU accession, France and Germany are, to all intents and purposes, still emerging markets for Irish businesses. That reflects bigger blind spots. Ireland has one of the lowest take-up rates of the Erasmus student-exchange programme and the Irish public still has an aversion to learning other people’s languages. Paradoxically, as Prof Michael Cronin once said, speaking a world language might have narrowed, not broadened, our world view.

Brexit poses grave threats to Ireland. The upheaval could well be traumatic. But it will also force the country into a overdue reckoning, making it confront what its Europeanness really must entail. Good.

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