EU NZ trade talks 'premature'

Talks on a free trade agreement between the European Union and New Zealand would be premature at this point, says EU Trade Commissioner Karel de Gucht.

De Gucht has been in New Zealand to attend the Christchurch earthquake memorial and for talks with his counterpart, Trade Minister Tim Groser.

The EU is New Zealand's second largest trading partner, slightly ahead of China as an export market and a source of imports, with two-way trade of more than $12 billion.

"We would like to discuss a framework agreement, with much more structuring of contacts, but a free-trade agreement including market access and tariffs would be premature, for two reasons," de Gucht said.

"First, let's see what the Doha round gives, because this would be a discussion, I believe, among other things, about agriculture. And secondly, we have engaged with several big trading partners [in South America and Canada] and we cannot do it all at the same time."

The Doha talks remain bogged down nearly 10 years after they were launched.

To revive them, de Gucht said, two "asymmetries" needed to be corrected. One was an over-emphasis on agriculture and the other a preoccupation with the needs of emerging and developing countries. "If you want to get something agreeable to everybody, you will have to rebalance this."

The world had changed dramatically since 2001, he said, citing the "two faces" of China.

"On the one hand it is still undoubtedly a developing country with as many poor people as Africa. On the other it has become one of our fiercest competitors all over the place. The emerging countries should realise that to a certain extent they have emerged."

It would really hurt the Word Trade Organisation if, after 10 years, you had to conclude that no solution was possible, de Gucht said. "We will do everything possible to get there."

Groser said the Doha talks were "just going around in circles".

"But no one will take the risk politically of killing it off. And sooner or later some political set of events will come together to move it forward. That is more likely than complete and irrevocable collapse," he said.

Groser, a senior trade official before he went into politics, said the trade relationship with Europe was now much less fraught than it had been after Britain joined the Common Market in 1973.

"We have a productive and fairly comfortable relationship with the EU, now that they have engaged in a series of reforms of the Common Agricultural Policy. While we still want to see further progress, they have taken an enormous amount of heat out of the equation," he said.

"There are no burning issues we need to resolve. On most issues we and the EU share similar perspectives."

De Gucht said he had been surprised to encounter in Australia a general feeling that the euro itself was at risk because of sovereign debt issues in some of the euro area's weaker members. Such a view was out of touch with reality, he said.

He pointed to an agreement to increase the lending capacity of European rescue funds to €500 billion ($970 billion) and to lower the interest rate and extend the term of loans to Greece.

He said there had been "game-hanging" reforms to improve the co-ordination of fiscal policy and economic policy more broadly in EU states.