Post Brexit – UK and Australia closer to securing a free trade deal
- UK on the brink of securing a GBP 18BN trade deal with Australia
- UK International Secretary described the UK-Australia trade deal as a post-Brexit win
- UK government believes the move will boost Britain’s financial and investment ties with Australia
- Britain’s farmers’ launch attack on UK government over Australian trade deal
The UK is on the brink of signing a GBP 18BN free trade deal with Australia, which will supposedly help “level up” Brexit Britain by lowering the cost of goods and creating thousands of jobs.
UK International Trade Secretary Liz Truss has been engaged in trade negotiations with her Australian counterpart, Dan Tehan, for several months. Today, the Department for International Trade (DIT) confirmed that the two are moving closer to an agreement.
According to the DIT, Liz Truss raised several concerns with Mr Tehan, including claims that a zero-tariff zero-quota deal would see British farmers severely undercut by Australian farmers.
Following the telephone call, Ms Truss said she is confident that a UK-Australia trade deal would be a “win-win situation”, predicting higher wages, more jobs and lower prices for Britain post-Brexit.
The Australia deal is also believed to be worth more than the GBP 18BN value given by Australian trade officials, with British officials stating that it is worth closer to GBP 20BN.
Will a deal with Australia help shore up the UK economy?
Liz Truss believes a UK-Australia trade deal will help level up Britain’s economy by adding GBP 400M to wages and give the UK a better chance of joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The lucrative CPTPP agreement is the third-largest trade deal globally, comprising of 11 countries, including Canada, Australia, Japan, and New Zealand.
If the UK were to join, this would open the door to trade worth GBP 9TN “without the need to join an EU-political style group”, says Patrick Wintour, diplomatic editor for the Guardian.
The International Trade Secretary said that is why the UK trade deal with Australia is vital as it will help Britain ascend to the broader CPTPP.
Liz Truss, who has promised to unleash a drum of opportunities for Britain as the country emerges from the COVID-19 pandemic, said that Britain would benefit significantly from the Trans-Pacific Partnership as “that part of the world is growing very, very fast.”
She added: “There is a growing demand for British produce in that corner of the world, and I want them to get their hands on our fantastic products, whether that is agricultural goods, cars, alcohol, insurance or financial services.”
Although Ms Truss has the globe in her sights, the International Secretary expects demand from Asian markets to surge over the next decade and says UK farmers should be looking towards those markets.
Australia is also desperate for a deal with Britain following crunch talks with Liz Truss; however, other ministers have expressed their concern over the Australian government’s zero tariffs, zero quotas demands.
Last week, a Cabinet row erupted between International Trade Secretary Liz Truss, former Brexit Chief Negotiator, UK Environment Secretary George Eustice and Cabinet Office Minister Michael Gove. Mr Eustice and Mr Gove pressed for the terms of the deal to be renegotiated out of fear that zero tariffs deal risks domestic political fallout and backlash from Britain’s farmers, many of whom have already voiced concerns over having to compete with Australian farmers.
UK Prime Minister Boris Johnson is believed to favour the agreement but has called for unity on the issue.
Mr Johnson told UK farmers that instead of fearing a free trade agreement, they should look at it as an opportunity, especially as Britain is keen to secure several free trade deals with countries across the world.
During a visit to Portsmouth last Friday, the UK Prime Minister told reporters that free trade agreements present UK businesses with a fantastic opportunity by lowering imports, securing our economic ties and creating jobs.
Mr Johnson stated: “I think it is vital that as a great historic free-trading nation that grew to prosperity thanks to free trade, that we see these new openings not as threats but as opportunities.”
Despite backlash from other ministers, Mr Johnson hopes Britain can strike a deal with its Down Under neighbour before the G7 summit next month.
Will the UK protect Britain’s farmers in a deal with Australia?
Since the UK left the EU, International Trade Secretary Liz Truss has signed deals worth GBP 900BN, covering trade with 67 countries.
If an agreement with Australia is finalised, this will be the first deal Britain has negotiated without any EU influence.
According to Ms Truss, this would reduce Aussie wine and food costs while creating welcome opportunities for UK firms by opening access to fast-growing Asian markets and workers with higher-paid jobs.
However, Cabinet colleagues have stressed that an influx of cheap Australian meat could ruin British farmers. The National Farmers Union’ (NFU) also warned the UK government that a zero-tariff zero-quotas deal would threaten the livelihoods of British farmers.
The Prime Minister insists that a deal with Australia would be phased out over a ten to fifteen-year period to give UK farmers time to adjust.
Liz Truss has also defended plans for a post-Brexit trade deal with our Down Under neighbours, stating that we have an “awful lot to gain from this deal and UK farmers have nothing to worry about.”
Officials have also insisted that any agreement with Australia would include safeguards for the British agriculture industry to ensure the protection of UK farmers.
A spokesperson for the Department of International Trade explained: “Tariff liberalisation is staged over time, and Australian meat accounts for a low proportion of total UK imports, so the impact on the farming industry is likely to be small.”
The DIT went on to say that they will continue to work closely with the agriculture industry to help farmers capture the full benefits of this trade deal.
Despite the reassurance, UK farmers are unconvinced and have launched a furious attack on the UK government.
UK farmers launch a blistering attack on UK government
British farmers have warned the British government that lower animal welfare standards and pesticides used in Australia could devastate UK farming and force meat producers to compromise on their high standards to remain competitive.
Welsh farmers have also expressed their concern over Australia’s modern approach to sheep-shearing, which they believe will undermine their more traditional model.
However, Alex Brummer of the Daily Mail said that a tariff-free deal with Australia is what Britain needs, and the 15-year transitional period is more than generous for British agriculture.
Mr Brummer said that British farmers have become so dependent on EU subsidies that any change to the status quo is being resisted.
He said this undermines the Prime Minister’s ambitions of creating a more global Britain and keeps the country tied to the bloc, which has become increasingly fragile post-Brexit.
The fragile unity of the EU is becoming more and more prominent, after European Economic Area (EEA) countries Norway and Iceland vindicated a hard Brexit.
However, the agricultural sector has reacted to the zero-tariff deal with fury, with industry leaders from Scotland and Wales particularly concerned about the terms of the agreement.
Chief executive of the National Sheep Association (NSA), Phil Stocker, said he was disappointed by the government’s response to the industry’s pleas and condemned Cabinet ministers for being prepared to “sacrifice the industry to gain elsewhere.”
Mr Stocker added: “If the deal goes ahead with its current terms, it will show the true colours of our ministers’ and what the future holds for the industry. We’ve had so many strong commitments from ministers about upholding and supporting British agriculture, and to give this away now would be shocking.”
Although crop and animal production accounted for just 0.6% of total UK gross domestic product (GDP) in 2020, industry leaders insist that farming represents much more than a contribution to output.
Champions of the sector said that the industry supports more than 300K jobs and plays a prominent role in food security and meeting environmental targets, essential to UK Prime Minister Boris Johnson’s levelling up agenda.
Farmers are not wholly opposed to the deal and would accept a large volume of Australian imports but want to be guaranteed protection with some form of permanent quota rather than a free trade agreement.
Farmers argue that a zero-tariff zero-quotas deal will eventually result in cheaply produced food and lower prices, irrespective of whether access to Britain’s market is given to Australia now or in fifteen years.
The Scottish National Party (SNP) described the trade proposal as “wholly irresponsible”, arguing that tariff-free imports of hormone-treated beef were like a slap in the face for rural communities.
Concerns have also been raised about whether the row over farming will fuel calls for another Scottish independence referendum, as rural communities that had previously been pro-union may have a change of opinion if the government goes ahead with the deal.