This article was first published by Exporter Today on 15 May 2017.
With UK retailer the Co-op planning to drop imported products such as New Zealand lamb, should our exporters be concerned? Tracey Epps examines what it really means.
The UK’s fifth largest retailer, the Co-op, recently announced that it would become the first national British retailer to sell only 100 percent British bacon and lamb, dropping imported products such as New Zealand lamb and Danish bacon.
New Zealand’s special agricultural trade envoy, Mike Peterson, has played down the significance of this, calling the Co-op’s move a marketing ploy*.
The question is, why do retailers think this message will attract customers?
It is over a decade now since the ‘food miles’ concept’ took off in the UK on the simple pitch that that the further food is transported, the higher its carbon footprint. Potentially serious consequences for New Zealand exporters were avoided thanks in large part to the efforts of researchers who demonstrated that this was an over-simplification and that the whole of a product’s life cycle needed to be looked at, not just its transportation.
But the Co-op’s announcement is emblematic of a resurgence of interest in the UK in buying locally. Paradoxically, this comes at a time when, post-Brexit, the UK government is looking to strengthen trading arrangements with Commonwealth countries, including New Zealand.
There is a place for consumers in any country to support local producers, but not to the exclusion of imported goods. For New Zealand, an export dependent country, with real strengths in the food and beverage sector, it is critical that markets remain open to our products.
Much has been said recently about the importance of reducing barriers to trade. But barriers to trade are typically imposed by governments, through instruments such as tariffs, import restrictions and onerous technical regulations.
The Co-op policy is different – it is a commercial decision made by a private entity with no government involvement. Such private decisions sit outside international trade rules.
This can be problematic, because if a retailer is large enough, or if enough retailers join the movement, a commercial action can have as profound an effect on market access as a government measure.
Jamaica and other Caribbean countries found this out in the early 2000s when their exporters were unable to sell bananas to the UK because of the insistence of major supermarkets that the bananas meet a prohibitively rigid set of private standards.
This essentially shut the Caribbean suppliers out of the UK market, but raising the complaint at the World Trade Organization (WTO) was not fruitful. The supermarkets’ policy was a commercial decision and the EU stated that they had no capacity to intervene under WTO rules.
It is a frustrating fact of international business that, no matter how many free trade agreements we enter, we cannot prevent retailers like the Co-op making their own purchasing policies.
But retailers will respond to their consumers. New Zealand businesses and the government must therefore continue to focus on building goodwill and the reputation of the New Zealand brand.
Tracey Epps is a trade law consultant at Chapman Tripp in Wellington.