AS I SEE IT: The Australia talks show that free trade comes at a cost, says TERRY MURDEN
The next few weeks could help determine the shape of Brexit Britain as the Government seeks to secure its biggest trade deal since the country severed ties with the EU in January. As International Trade Secretary Liz Truss says, ministers are in a sprint to agree in principle a trade deal with Australia by early June ahead of the G7 summit being hosted by the UK and which Australia’s prime minister Scott Morrison is expected to attend.
Ms Truss claims the deal will have “benefits for all nations and regions of the United Kingdom, and all industries, including the agriculture industry”.
That’s not how the nations and regions, nor the agriculture industry sees it. Britain’s beef and lamb farmers are warning the proposed tariff-free deal will put many of them out of business.
Put simply, Australia’s farms operate at many times the size of our own. The average beef herd in the UK is between 28 to 50 cows, according to the National Farmers’ Union. A report published by the Australian Competition and Consumer Commission found that in northern Australia the average herd size was 1,576 per farm. Furthermore, because of the warmer climate the Australians do not incur the costs associated with sheltering livestock as required in northern Europe.
Hence, they can supply cheaper – and they would say better quality – meat which they also claim is in huge demand in the UK.
The NFU is understandably worried and claims a free trade agreement would be an “absolute betrayal” of British farmers after prime minister Boris Johnson had given NFU president Minette Batters his personal assurances that he would protect farmers in all trade agreements.
It is not only UK farmers who are worried about the proposed deal. The UK buys nearly half of all beef exported from Ireland, worth €1 billion, and its farming industry shares concerns that a free trade deal with Australia will be followed by others. Canada has indicated it wants similar access to UK markets.
The Scottish and Welsh governments are leading the home charge, though the SNP’s Westminster leader Ian Blackford typically chooses to portray it in constitutional terms as an attack on Scotland, claiming that “the Scottish Secretary must be ready to resign in protest if the deal goes through against Scotland’s will”.
Turning the dispute into another Westminster-Holyrood battle is adding an unnecessary layer of political mud-slinging to the existing tensions. Even so, he has a point. Scottish farmers will most likely suffer disproportionately, not least because of their smaller scale of operation.
Mr Johnson has dismissed Mr Blackford of “grossly underestimating the ability of the people of this country, the agricultural communities of this country, the farming industry to make the most of free trade.”
He may be underestimating the size of the challenge. In a report last September Rabobank said it expected post-Brexit UK to become the fifth or sixth largest beef-importing country, an indication of how free trade agreements work both ways.
Mr Johnson may take comfort from Australia’s trade minister Dan Tehan who says British farmers have nothing to fear and Australia’s former foreign minister Alexander Downer who said “Australia isn’t planning an avalanche of beef and sheep meat exports into the UK market. Australia’s markets are predominantly in Asia.”
This contrasts with comments by Hugh Killen, the chief executive of the Australian Agricultural Company, who has forecast that beef exports could increase tenfold.
‘As if settling the deal with Australia is not enough, the row between the government and farming unions may set the template for controversies to come in talks with other non-EU nations’
Mr Johnson speaks of seeking out opportunities rather than fearing threats and the UK International Trade department estimates that a free trade agreement could increase UK exports to Australia by up to £900m.
Supporters include Lord Frost, the Brexit Minister, and Kwasi Kwarteng, the Business Secretary. However, Environment and Agriculture Secretary George Eustice, and staunch Brexiteer Michael Gove, have expressed some alarm over the terms and timescale of the agreement and find themselves, to that extent, unlikely allies of Mr Blackford and the Labour-led Welsh Government.
The pair – dubbed “Waitrose Tories” for wanting to prop up rich landowners at the expense of new Red Wall Tory voters – are also siding with those concerned that trade deals should not compromise on food and environmental standards.
As if settling the deal with Australia is not enough, the row between the government and farming unions may set the template for controversies to come in talks with other non-EU nations. The UK government last week announced that negotiations are due to begin for upgraded trade deals with Canada and Mexico this year focused on creating even greater opportunities for UK businesses in “industries of the future” such as digital, data and services.
For now the focus is on agriculture and, as noted by the EU affairs website Euractiv, the US in particular is keen to have unfettered access to the UK market for its agrifood sector. UK government ministers are divided on whether imports of US beef and chicken, which are produced using different sanitary and phytosanitary standards, should be permitted.
Mr Eustice and Mr Gove, his predecessor are both known to oppose allowing these products into the UK market which could lead to the UK’s regulatory standards diverging significantly from those in the EU.
All this could be causing some hand-wringing in the Gove household as it is the ability to cut free trade pacts without the restraints of the EU that he and his Brexiteers promoted as one of the main economic reasons to leave the bloc. The chlorinated chickens may be coming home to roost.
tmurden@dailybusinessgroup.co.uk
Terry Murden formerly held senior positions at The Sunday Times, The Scotsman, Scotland on Sunday and The Northern Echo and is now editor of Daily Business
Leave a Reply