Prime Minister Jacinda Ardern and European Commission President Ursula von der Leyen signing a deal on policing, shortly after trade talks concluded. Photo / Thomas Coughlan
In 2018, the year New Zealand and the EU formally began trade talks, Prime Minister Jacinda Ardern made a bet with Peter Berz, the EU's chief negotiator.
Berz, a veteran of the EU's Brexit negotiations, thought talks would be wrapped up quickly. Ardern thought they would take a little longer. The wager was a bottle of wine.
The more realistic Ardern was right. The agreement was concluded over twelve negotiating rounds that stretched on for four years and only finished around midday Brussels time on Thursday this week.
Hours later, an exhausted Benz arrived at a party at the New Zealand Ambassador's residence in the leafy suburbs of Brussels, along with Members of the European Parliament MEPs, dignitaries, New Zealand trade negotiators, and sector groups like Zespri.
A clearly elated Ardern gave a brief speech, reminding Benz of his wager. She produced a bottle of Obsidian Reserve 2014, from Waiheke Island - "tariff free" she joked - and handed it to Benz.
She'd won the bet, but she gave him the wine anyway.
Ardern was, in many ways, the winner - but the deal came very close to not happening at all.
An agreement with the EU is a prize for any government. Thanks to Brexit, New Zealand was able to secure a very good, very quick deal with the UK. An agreement with the EU would inevitably take longer, and involve more compromise. Negotiations are formally between New Zealand and the EU, but the talks are often painfully slow because they have to appease the EU's 27 members.
This gives small nations incredible power over any deal. Countries like Ireland, which was concerned by what the deal could mean for its dairy sector, can slow a deal, despite being sixteen times smaller than large countries like Germany, which was relatively supportive (New Zealand is unlikely to pose a threat to the powerful German auto industry).
The timing of the deal was difficult too. Europe is a fiercely protectionist market, and many populations within Europe are opposed to free trade.
Last year, negotiations were put on "pause" during the French Presidential election, with the French worried that continuing talks could risk the deal becoming an election issue, boosting the chances of far-right candidate Marine l Pen.
New Zealand was receptive to this argument, concluding that a Le Pen Presidency would likely mean the death of any deal, not to mention the Trump-style chaos it would unleash in Europe.
The pause was a long one. No negotiations were held between July 2021 and March of this year.
When Ardern left for Europe last Sunday, ministers were quite clearly laying the ground for a deal.
Trade Minister Damien O'Connor and Ardern herself both stressed this was a "multilateral" negotiation with a number of countries, and very different to the UK FTA, which was one-to-one. Multilateral agreements require compromise.
The UK was also keen for a post-Brexit deal, and keen to leverage the negotiations into a bigger prize, entry to the CPTPP.
New Zealand had no such leverage over the EU, which could afford to wait.
O'Connor also stressed the complexity of the negotiations, which could not just focus on agriculture as they might have done three decades ago. New Zealand had a more complex economy now, and the trade deal had to serve areas like digital trade too.
"All those commodities and products are important to us, but we've got a lot of other products as well," O'Connor said.
There were some concerns, raised by National Party trade spokesman Todd McClay, that New Zealand had rolled over too early on geographic indicators (GIs), naming protections that mean only Greek companies would be allowed to use names for things like feta. In the end, New Zealand compromised on relatively free GIs, keeping the right to use names like Camembert and Brie.
New Zealand's prize in any negotiation is the removal of all tariffs. A small, open economy, tariffs mainly exist in New Zealand so trade negotiators have something to offer other countries - they do not really exist, as they do in other countries, to protect sensitive industries.
Ardern said she would be willing to leave Europe without a deal, if what was on offer was not good enough.
"I am very willing to come away from Europe without final conclusion of those talks if we don't see commercially meaningful access for our exporters," Ardern said.
By the time Ardern arrived in Europe, her tune had changed. National urged Ardern to leave Europe without a deal if it did not include high-quality concessions on agriculture.
The first leg of Ardern's trip, the Nato leaders summit in Madrid, was not trade related at all. The summit was focused on the war in Ukraine, and the threat of a more "assertive" China.
But with Europe's leaders gathered in Madrid, Ardern had an opportunity to accelerate talks
New Zealand's chief negotiator Vangelis Vitalis had negotiated the deal to something of a landing zone, but there were fishhooks around areas like agriculture.
In most trade agreements, these can only really be resolved at the "political level" - that's when officials step back and allow for minister-to-minister or, even more significantly, leader-to-leader talks.
Ardern had three big opportunities at the Nato summit to get some movement on these. In her formal bilateral meetings with the likes of Spanish President Pedro Sanchez and French President Emmanuel Macron, informally over dinner at the Palacio Real on the first night of the summit, when leaders gathered to eat with the King, and on the sidelines of the main summit meeting itself.
The dinner provided an intimate setting in which to push for a deal. Only leaders and spouses were invited, and the seated part of the dinner was very brief, leaving time for mingling and lobbying.
At other events, Ardern was able to discuss aspects of the trade deal with a leader, whose officials, also in the room, could push Ardern's points to the whole 27-member bloc.
Having everyone in the room sped up the metabolism of negotiation, not just between New Zealand and the EU, but between the EU states themselves, who had to agree to any asks made by New Zealand.
Yet these changes weren't enough.
Ardern reiterated she might leave Europe without a deal, and Trade Minister Damien O'Connor and Vitalis steeled themselves for more diplomacy.
"I am very willing to come away from Europe without final conclusion of those talks if we don't see commercially meaningful access for our exporters," Ardern said as she left Madrid.
The deadlock again, required intervention at the political level. More than one call took place between Ardern and European Commission President Ursula von der Leyen, trying to resolve the deadlock.
Even then a deal was not guaranteed. On Thursday morning, Ardern announced she had held a surprise phone call with Ukrainian President Volodymyr Zelenskyy. Was this a distraction to stop people thinking about the trade deal?
Later that day, the unexpected cancellation of a photo op freed up some time in the media schedule. Media accompanying the Prime Minister were taken on a brief sightseeing tour of Brussels, all the while knowing very little about how talks were progressing.
Over a morning tea of Belgian chocolates, reporters speculated whether this was a good or a bad sign for the talks.
Around midday, talks concluded. Ardern later said adjustments and decisions were made right to the end. Trade negotiators say one of the things that can conclude trade talks is the exhaustion of both sides. This appears to have been the case here.
Agriculture appears to have been a major hold-up.
O'Connor told a press conference after agreeing the deal that, "it's probably fair to say that no one likes it, so we probably have it about right".
In a media stand-up shortly afterwards, O'Connor conceded that particular wording had been a mistake, but the sentiment was correct, with one European agricultural lobby calling the compromises "painful".
At a party at the New Zealand ambassador's residence celebrating the deal, O'Connor joked he had the redundant task of speaking at an event alongside the Prime Minister.
Ardern responded by throwing her hands together and joking "good speech".
In her own speech, she paid tribute to O'Connor and Vitalis, noting that in the Government's five years in office it had concluded five trade deals and upgrades (some of these, like the CPTPP, were largely negotiated already).
The political fallout began immediately.
Sirma Karapeeva, chief executive of the Meat Industry Association, was in Brussels and at the trade deal party.
Awkwardly, she had put out a release saying she was "extremely disappointed" the deal did not include "commercially meaningful access for our exporters".
Ardern appears mindful of this disappointment. One question that hangs over all trade agreements is whether no deal is better than a bad deal - bad deals, after all, set low standards for future deals.
The clock was certainly ticking on negotiations. Had New Zealand walked away, negotiations might have stalled once again as many European countries, not to mention the European Parliament, head to the polls towards the middle of the decade. Should those elections politicise the talks, it could become more difficult to get a deal of any kind.
Speaking to media immediately after the deal was concluded, Ardern said she could not walk away from what the deal offered.
"The calculation we have to make is if we walk away, do we lose the opportunity altogether. My calculation is that we would, and walking away from $1.8 billion is not something I was willing to do for the New Zealand economy," Ardern said.
In London on Saturday, Ardern offered another defence of the deal.
Any trade deal must be ratified by the 27 EU member states. Some trade deals, even after negotiations, have struggled to be ratified, leaving the deal only partly complete.
A deal struck in 2014 with Canada is still not ratified, and therefore not fully in force.
Ardern said she was confident this deal would survive ratification.
"When you look around at the other FTAs that exist with the EU, you see that ours is a really important milestone. Some have never completed ratification. We're confident ours will," Ardern said.
The coming weeks and years will test whether she is right.
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