Growing risk of a 'no-deal' Brexit threatens NZ trade

New Zealand Wine (on sale in in London) could face Brexit related costs. Photo / File

As the UK parliament voted to try and head off a drastic "no-deal" Brexit, an international research company has warned that New Zealand exports to the UK are at risk.

The UK parliament today voted on a range of amendments to Prime Minister Theresa May's proposed deal for Britain to exit the European Union.

The two that passed included a non-legally binding agreement to avoid a "no-deal" Brexit and the dropping of the Irish Border Backstop proposal from the deal.

The EU immediately issued a statement saying the Irish Border Backstop was not negotiable.

The backstop relates to plans to maintain a soft border between the Republic of Ireland and the British Northern Ireland.

Critics have accused the British parliament of effectively voting against a no-deal Brexit at the same time as voting for a proposal that makes one more likely.

International research group IBISWorld has warned that a no-deal Brexit could see New Zealand exports delayed at borders, increase supply chain costs and make it more difficult for UK retailers to stock goods imported from New Zealand.

The UK is New Zealand's sixth largest export market and it is expected to import more than $1.4 billion worth of our goods in the 2018-19 financial year.

Our biggest exports are wine and meat.

IBISWorld analyst Liam Harrison, said a no-deal Brexit would "increase custom restrictions on these goods, apply tariffs on some goods that have been previously exempt and disadvantage companies that rely on re-exporting from the UK to the EU".

"A no-deal Brexit would likely increase the costs and procurement times of New Zealand exports, reducing demand for these products," he said.

"In event of a no-deal Brexit, the UK reverts to the World Trade Organisation (WTO) rules regarding trade, which would force the UK to place tariffs and quotas on certain products."

New Zealand and the UK have signed a Mutual Recognition Agreement, which allows UK customs to recognise authorised certifications from New Zealand and allows customs to speed up checks.

While that may mitigate the effects of Brexit, it is still likely to threaten New Zealand's exports to the UK, Harrison said.

"Exporters are likely to invest in portable refrigeration units and other systems to prevent perishable goods from spoiling, which will certainly increase the price of these exported goods from New Zealand," said Harrison.

The timing of the deadline (March 29) could also present problems for New Zealand lamb as it was close to Easter which is a peak time for exporters.

A post-Brexit world was unlikely to be friendly to businesses reliant on trade between the UK and New Zealand until a free-trade agreement is agreed upon by the two nations, Harrison said.

New Zealand and British trade officials have been in preliminary discussions about a free-trade deal since March 2017.

They will proceed with formal negotiations as soon as practically possible after Britain's exit from the European Union takes place.

A proposed free-trade deal with the EU is further advanced - a third round of formal negotiations is about to get underway and there are hopes a deal may be struck by the end of the year.