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Myth #5: The UK Australian Trade deal was rushed, hurts British farmers and/or is one-sided.

british farmer
Written by Catherine McBride

Despite the complaints by some Remainers, the UK Australia Trade Agreement extensively protects UK farmers at the expense of UK consumers. This agreement does not protect any other industry in the UK.

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I am not sure where this myth started; I suspect the National Farmers Union (NFU), but even the Prime Minister has repeated it. To be fair, he was attempting to win over the rural vote in the 2022 leadership election, but as he was the Chancellor of the Exchequer when this trade agreement was negotiated and signed, I would have expected him to be aware that it wasn’t rushed and provides extensive protection for UK farmers, to the detriment of UK consumers.

Chapter 2 of the UK-Australia Free Trade Agreement lists all products by Harmonised System 8-digit tariff codes. This chapter runs to 786 pages and covers about 10,000 products. In the Trade Agreement, the UK eliminated its tariffs immediately on all 10,000 products except for 554 agricultural products. Even agricultural by-products such as sorbitol, starches, glues and albumin will have to wait 4 years or 8 years before their tariffs are removed completely, with the exception of Egg Albumin which has been excluded from the trade deal entirely.

Egg albumin isn’t alone. In total, 92 products were excluded from this trade deal, and they were all agricultural products. 207 products have retained restrictive import quotas for 4, 5, 8 and 10 years, and they are also all agricultural products. 43 products have additional 5-year product-specific safeguards which allow the UK to add a 20% tariff, if imports exceed a certain trigger level after their 10-year quotas expire, and as I am sure you have guessed – these are all agricultural products. The UK will also reduce its tariffs on 194 goods over 4 years and on 61 goods over 8 years. And yes, these are all agricultural products. So how could anyone imagine that someone drew up all of these restrictions in a rush? Even the notes to the UK’s tariff schedule run to 14 pages, Australia’s is one page and three paragraphs. (New Zealand’s is just two paragraphs – they are eliminating all tariffs immediately.)

Australia’s farmers could claim that their negotiators might have rushed – Australia only protected 3 cheese tariff codes and will lower these tariffs over 6 years. Australia will also lower their tariffs on some steel coils and springs over 5 years. (The UK did not think to protect its steel industry, yet it is UK farmers who are complaining!) But for the rest of the 10,000 products listed in the agreement, Australia eliminated its tariffs in full immediately. And Australia has no quotas or product-specific safeguards.

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A one-sided deal?

While some UK farmers might be relieved to know that the myths about the UK Australian Trade Agreement are exactly that – myths, this really isn’t a good deal for UK consumers. Most of the benefits from trade deals come from imports. Trade deals benefit the population if they allow people to buy goods that are less expensive, more innovative, or out of season in the domestic market, or impossible to grow in the domestic climate, etc.

After 47 years in the EEC/EU, UK trade negotiators appear to have forgotten this and value exports more than imports. So, while UK exporters have already benefited from the Australian trade deal with increased exports of British-made cars, aircraft and boats, UK consumers can correctly complain that they have seen little benefit from the Australian trade deal. And UK consumers won’t see any benefits from the Australian trade deal for 4, 5, 8, 10 or even 15 years because the 458 products, which Australia produces most efficiently – beef, lamb, wheat, barley, sugar, dairy products, and many types of vegetables, fruits and fruit juices – are also the products that will have their tariffs and/or quotas only gradually removed. Even crops such as rice, that cannot be grown in the UK, have retained trade restrictions in the UK Australia ‘trade’ agreement.

Surprisingly, many of the products that will retain their trade restrictions for years are seasonal, so would not compete directly with British farmers, while others are goods that the UK already imports in massive quantities because its population has outgrown its agricultural production capacity.

The UK imports: about 1 million tonnes of sugar each year, about half of its annual consumption; 2 million tonnes of vegetables, excluding potatoes, also about half of the UK’s consumption each year; an additional 2.4 million tonnes of potatoes, about 40% of our annual consumption; and a massive 3.6 million tonnes of fruit, about 83% of the UK’s annual consumption. The UK also imports: 290,000 tonnes of beef; 650,000 tonnes of pork; 56,000 tonnes of lamb; 626,000 tonnes of chicken; and 165 million dozen eggs (that’s just under 2 billion eggs). The UK also imports: 433,000 tonnes of cheese; 264,000 tonnes of yoghurt; and 58,000 tonnes of butter.

While I respect the right of any independent nation to protect whatever it likes in a trade deal, when you read the quantities of foods that the UK imports listed above, it is hard to understand why we have placed any restrictions on Australian agricultural goods.

Remain supporters claim that the UK hasn’t benefited from the Australian trade deal – well Duh! How could we, if the goods Australia produces more efficiently, will only have their very high EU-era tariffs removed gradually over many years? For example, although the UK’s £1390 per tonne tariff on Cheddar is now, in the 2nd year of the trade deal, reduced to £926.7 per tonne, that is still high enough to make Australian cheddar uncompetitive in the UK market. So, UK supermarkets will continue to import Irish cheddar instead.

UK meat exports

There is another, slightly laughable codicil to this myth: Australia restricts UK meat exports with its very strict SPS regulations. While I am sure Australia does have very strict SPS regulations, this is still an amusing complaint because the UK doesn’t really export much beef (see graph below), at least not prime cuts. According to The International Meat Trade Association, the UK mostly exports offcuts such as hindquarters, skirt, and offal. Australia is unlikely to buy these products even if they could get passed the SPS regulations, because as a major beef producer, Australia has more than enough off-cuts of its own and doesn’t need to import any more from the UK. Trade is determined by need, not just availability.

However, if UK farmers really fancy themselves as exporters, they should try to compete with Australian farmers in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Australia exports hundreds of thousands of tonnes of beef and sheep meat to CPTPP countries such as Japan, Singapore, Malaysia, Vietnam, and Canada. It also exports beef and sheep meat to Gulf Cooperation Council (GCC) countries: Saudi Arabia, Kuwait, Bahrain, Oman, Qatar and the UAE. The UK has joined the CPTPP and is negotiating a trade deal with the GCC, so instead of demanding to be allowed to export the proverbial ‘Coals to Newcastle’, UK farmers should be marketing their meat and meat products to their new trading partners who rely on imported meat.

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About the author

Catherine McBride