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Overlooked benefits from the UK Australia trade deal

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Written by Catherine McBride

Free trade, whether with the EU or with non-EU countries, is hugely beneficial for the UK economy. It increases exports, lowers the cost of imported goods giving consumers more money for other goods and it forces domestic producers to be more competitive. While Australia has dropped almost all tariff on UK exports immediately, it will be up to 15 years before we drop all of the protections for UK farmers, which will also delay any import driven improvement in UK farm productivity.

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The UK Australia trade deal is now in force, and this has brought out all of the diehard Remainers. Like the Japanese soldiers who kept fighting in the jungle long after their leaders had surrendered, these Remain warriors cannot face reality.

Their primary concern is for British farmers, or so they claim, even though they seem to be unaware that all of the UK’s continued trade barriers are to protect British farmers. The Remain warriors seem to be completely uninterested that Australia has dropped all tariffs and quotas on almost all British goods with the exception of some steel coils and pipes and some UK cheeses, which will need to wait for 5 years and 6 years respectively, before Australians can import them completely tariff free.

This should be very good for UK exporters. Despite the Remain obsession with British farming, the UK’s biggest exports are not agriculture but machinery, vehicles, aircraft and seacraft, electronics, precision equipment, pharmaceuticals and chemicals. Together they made up over 50% of UK exports by value in 2022. To put this in perspective, according to the ONS, UK exports of unprocessed agricultural products made up just 0.6% of total UK exports in 2022. Manufactured food is higher, at 3.3%, but these products often contain imported ingredients, most noticeably chocolate.

What the Remain warriors ignore is that free trade whether with the EU or with non-EU countries is hugely beneficial for the UK economy.

Trade benefits countries in several ways: increasing exports, lowering the cost of imported goods and forcing domestic companies to be more competitive. The last point is often overlooked but it has been existential for British industries for centuries.

The UK Australian trade deal could also shake domestic producers out of their complacency. It may even give them ideas for new goods or new processes. The UK used to be a master of this: for example, porcelain was first imported from China, before being copied and manufactured more efficiently in the UK and ultimately became a large UK export industry whose products were even exported back to China.

Now, under the new trade deal, British porcelain can be exported tariff free to Australia. As can almost all UK manufactured goods: from chemicals to make-up and from bandages to clothing. On page after page in the tariff schedule, Australian tariffs on UK goods have been eliminated in full. In contrast to the UK, Australia removed most of its tariffs on British goods immediately. Even on goods that will be in competition with Australian goods.

We should expect to see an increase in exports of UK made cars, boats, other transport goods, machinery, mining equipment, graders and diggers and precision equipment. Cars and machinery are two of the UK’s most valuable exports internationally and will now be tariff free in Australia while their EU competitors will still have 5% tariffs added to their import price.

But the benefits of this trade deal are not just for mechanical exports. Although Australia had no tariffs on unprocessed meats or cereals, it does have tariffs on most processed and manufactured foods. These tariffs have now been dropped for British goods which is lucky as the UK is a much larger producer and exporter of manufactured food and drink than unprocessed agricultural products, as noted above.

Australian tariffs have been dropped, among other products, on: chocolate; gingerbread; biscuits; jams; gherkins; apple juice; dairy spreads; margarine; dried mushrooms; frozen vegetables such as potatoes and spinach; fresh grapes; frozen strawberries; dried apples, prunes, and apricots; potato flour; hop extract; nut oil; rape seed oil; and on alcoholic beverages such as whisky, gin and  sparkling wine. Alcoholic beverages made up 2.2% of UK exports in 2022.

More importantly: ham, sausages and other pork products have also had their tariffs removed. Australian consumption of pork has been increasing and incredibly even overtook beef consumption in 2015. But Australia doesn’t produce much pork and local production fell by half between 2005 and 2020.  So, pork is the only meat Australia imports in any quantity. Much of it comes from Demark, Netherlands, USA and Canada. Fresh, chilled or frozen pork has zero tariffs in Australia but manufactured pork products such as sausages and hams have 5% tariffs. Under the trade agreement UK hams and sausages will be tariff free, unlike similar EU imports.

These are just some examples of products that Britain makes and could be exporting to Australia. There are many more.

The second benefit of trade, cheaper import prices, will unfortunately have to wait, especially for agricultural products such as beef, sheepmeat, wheat, barley, dairy products, sugar, milled rice, many vegetables and some fruit. Products where lower prices would benefit UK consumers because Australia has a distinct comparative advantage in their production, will unfortunately retain their UK tariffs for many years purely to protect UK farmers. Importing goods that can be produced more cheaply in other countries allows Britons to spend less on these goods and more on other things. This benefits the economy as much as increasing exports.

The Remain warrior myth that the trade deal doesn’t protect British Farmers is laughable. British farming is the only industry that has been protected. And this protection lasts for up to 15 years for UK beef and sheep farmers.  As for British consumers, they will have to wait to see any real competition between food from the EU and food from Australia or New Zealand. It will be:

  • 15 years before the UK will be able to import as much tariff free beef from Australia as it presently imports tariff free from Ireland.
  • 15 years before the UK could import as much tariff free sheepmeat from Australia as it has been able to import from New Zealand for decades.
  • 5 years before Australian dairy products can be imported tariff free as they are now from the EU. The UK imported Dairy products worth £3.35 billion in 2022, £3.2 billion of which came from the EU.
  • 5 years before more than 80,000 tonnes of Australian wheat can be imported tariff free, even though the UK imported a total of one and half million tonnes of wheat in 2022.
  • 5 years before more than 7,000 tonnes of Australian barley can be imported tariff free, even though the UK imports between 50,000 and 200,000 tonnes of barley each year.
  • 8 years before more than 80,000 tonnes of Australian sugar can be imported tariff free. Even though, the UK imported 700,000 tonnes of sugar in 2022, and some years has imported as much as 1,250,000 tonnes.
  • 4 years before tariffs on strawberries and pears will be eliminated while tariff will remain on bananas, apples and grapes for 8 years. (Yes, Bananas – not something that British farmers grow.) The UK imported 3.6 million tonnes of fresh fruit in 2022.
  • And 4 years before the tariffs on Australian vegetables ranging from asparagus and broccoli to sweetcorn and truffles will be removed. The UK imported almost 3 million tonnes of fresh vegetables last year.

As the UK already imports so much of these goods from the EU, retaining the tariffs on Australian food imports will only protect EU farmers, not British ones. EU farmers will be able to continue to supply the UK with imported food, unchallenged by competition from Australian farmers.

There has also been scare-mongering by Remain warriors about UK standards being lowered by the trade agreement, but this is not true. It is illegal to import or sell goods in the UK that do not meet UK standards, this includes beef produced using additional hormones (HGP) to increase the animal’s muscle mass. Any beef imported by the UK must meet EUCAS standards, and EUCAS standards don’t allow HGP beef. All imports must also meet the UK’s standards for pesticide residuals — Maximum Residual Level (MRL) — so if Australia has approved different pesticides, which is likely as they have different pests, their products must comply with UK MRLs before they can be imported. This applies to imports from any country.

Ironically, the continuation of these protections for British, or in reality for EU, farmers will also prevent the UK gaining the third benefit of trade – a more competitive local economy.  The delay in allowing import competition also delays the need for domestic producers to improve their productivity.  Free trade would force UK farmers to become more efficient and encourage innovation.

Since joining the EU and receiving subsidies: first for production, then for owning farmland and now for re-wilding their farmland, many British farmers have become complacent and seem content to simply supply the local market. British farmers complain about the oppressive purchasing power of UK supermarkets, but few have bothered to respond to this by starting cooperatives or marketing directly to consumers.  Some ‘farmers’ seem content to be rent seekers and their representatives are more likely to be seen in Westminster demanding more protection and spurious ‘environment’ payments than seen promoting UK farm innovation or food exports.

Walk around an Australian supermarket and you will see Lurpak butter from Demark and Kerrygold butter from Ireland but where is the British butter? Which UK companies are marketing their goods in Australia rather than simply demanding they be returned to 2016 when they had compliance cost free trade with the EU?

Interestingly, imported agricultural goods are mainly tariff free in Australia, even though agriculture is a massive industry there.  It appears their government puts the interests of Australian consumers ahead of producers. Or perhaps, Australia proves my third point  – competition from trade has made their domestic producers more efficient and resilient. Consequently, they don’t need to demand protection from trade.


UK tariffs, quotas and product specific safeguards

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About the author

Catherine McBride