The UK will on Friday offer Australia a tariff-free, quota-free trade deal after Prime Minister Boris Johnson insisted it should go ahead in spite of warnings it could seriously damage British farmers.
Downing Street refused to comment on the details but has not denied a report in The Sun that tariffs would be removed after 15 years to give British farmers time to prepare to face new competition in areas like beef and lamb.
That outcome represents a victory for cabinet free traders, led by international trade secretary Liz Truss, who insisted that Britain should offer Australia a similar deal to the zero-tariff, zero-quota deal it struck with the EU after Brexit.
Truss will discuss the proposal on Friday with Dan Tehan, her Australian counterpart, who has insisted that any trade deal with the UK should include full tariff liberalisation, including on agriculture.
Tehan on Friday said British farmers would have nothing to fear from an Australia-UK free trade deal, insisting it would provide opportunities for greater collaboration with Australian farmers and pave the way for the UK to join a wider Asia-Pacific deal.
“We shouldn’t fear the economic relationship, we should embrace it and we should seek to learn from each other,” he told business leaders at an Australian British Chamber of Commerce event in Sydney.
He would not comment on whether Australia would oppose any lengthy phaseout of tariffs or the maintenance of quotas to protect UK farmers.
Minette Batters, president of the National Farmers’ Union, said the potential deal failed to protect UK farmers, with livestock producers most at risk.
“We continue to maintain that a tariff-free trade deal with Australia will jeopardise our own farming industry and will cause the demise of many, many beef and sheep farms throughout the UK,” she said. “This is true whether tariffs are dropped immediately or in 15 years’ time.”
She said the NFU was seeking “urgent clarification from government as to how this trade deal is in line with their own policy about respecting sensitive areas”.
The Scottish government also said the reported deal was unacceptable. Mairi Gougeon, rural affairs secretary, wrote to Truss on Friday calling for an urgent meeting and saying the deal should include a tariff rate quota system.
“At a time when UK agri-food producers are facing significantly greater barriers to trade with Europe – the sector’s largest export market – it would be incomprehensible for the UK government to sign up to a trade deal that would facilitate mass imports of Australian agri-food produced to a lesser standard,” she said.
“A trade deal that liberalises tariffs for Australian farmers, to put it bluntly, will put UK farmers out of business.”
George Eustice, UK environment secretary, had said that zero tariffs should only apply to a specified quota of beef or lamb imports, so that protections could be maintained in the event of a surge in imports.
But Australia had indicated that such a restriction would not be acceptable and Johnson, at a meeting of senior cabinet ministers on Thursday, insisted that an ambitious deal should go ahead.
On Wednesday Johnson told MPs that British farmers were innovative and could be confident of selling their high-quality products around the world.
The Australian trade deal is seen as a litmus test for Britain’s post-Brexit commercial policy by both politicians and farmers. Robin Traquair, vice-president of NFU Scotland, said the possible deal was “the thin end of the wedge” and he expected it to lead to similar agreements with countries such as New Zealand and the US, where, as in Australia, typical livestock farm sizes are much larger than in the UK.
“I can see the number of farmers reducing and farms having to get bigger,” he said.
Robert Buckland, justice secretary, told the BBC’s Today programme on Friday that Britain’s animal welfare standards would not be weakened to accommodate a deal with Canberra.
“The government has always said any free trade agreement we reach with Australia or other countries around the world . . . will of course take into account the very high welfare standards we apply in the UK,” he said.
“And of course we will make sure that British farmers are not undercut or put at a disadvantage bearing in mind the quality and excellence of the products made here in the UK.”
Sheep is currently Australia’s second-largest export to the UK after wine: £45.7m of Australian lamb and mutton arrived in the UK in 2020, with EU-style tariffs and quotas still in place. Beef exports were smaller, at £4.1m, according to figures from HM Revenue & Customs and the Food and Drink Federation.
But Peter Hardwick, trade policy adviser for the British Meat Processors Association, said the arrival of relatively small amounts of the more expensive cuts of beef — such as strip loin, where the highest margins are made — could hit British producers hard.
“When people talk of a ‘few thousand tonnes’, the question is, ‘tonnes of what?’” he said. “A few thousand tonnes of tariff-free, high quality meat is a lot. And it is no coincidence that the EU operates tight TRQs [quota limits] in this area. The Aussies are not going to be sending us cheap manufacturing beef.”
Farmers are also concerned over potential imports of Australian cane sugar that would compete with UK sugar beet, a sector already under pressure. The UK’s sole importer of cane sugar, Tate & Lyle Sugars, has previously said it would like to import more Australian product.
Neil Parish, Tory chair of the House of Commons environment committee, said this week that farmers in the UK would have to face “a little more competition” and would have to innovate in the coming years.
Tehan said a free trade deal between the UK and Australia could provide a template for Britain to join the CPTPP, a comprehensive trade agreement covering 11 nations in Asia, Latin American and Oceania. UK accession to this agreement would open a huge new market for British farmers, he added.
Source: Economy - ft.com
