May 27, 2021

Europe

UK: Australia deal to go ahead, but questions remain around “Global Britain”

BY Carsten Nickel

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Following some intense debate in cabinet, it is now likely that the UK and Australia will sign a new free trade agreement at the June G7 meeting in the UK when Australian Prime Minister Scott Morrison will attend as a guest. The UK has accepted that Australian meat exports will be tariff and quota-free after a phase-out period of 15 years. Previously, the UK had considered (and then rejected) the option of tariff rate quotas (TRQs) which could have protected UK arable farmers if Australian exports exceeded a certain defined tonnage per year.

In the UK cabinet, proponents of the deal (including Trade Secretary Liz Truss and Brexit Cabinet Minister David Frost) believe it will make a strong statement about the intent of the UK to strike new deals post Brexit. As the first new trade deal that does not merely roll over previous EU agreements, the Australia deal might set up the UK to reach a similar deal with New Zealand; it may also smoothen the passage of the UK into the 11-country CPTPP over the next year or two.

However, opponents – including Farming Cabinet Minister George Eustice and Cabinet Minister Michael Gove – have warned that Australia has lower farming standards than the UK, impacting UK farmers and the union if Scottish and Welsh hill farmers were to be particularly badly affected. Future trade partners – including New Zealand and Canada – might now demand the same tariff and quota-free access for their agricultural goods.

The debate is politically interesting as another manifestation of warnings that emerged since the beginning of the Brexit debate in the UK. On the one hand, the UK wants to break away from EU regulation and strike independent trade deals as “Global Britain.” However, the UK’s power in such negotiations is reduced given its smaller size, while domestic pressure continues for a regulatory regime that is rather close to the rules traditionally requested by European consumers (and thus the EU).

These domestic demands show no sign of ebbing away. For instance, environmental campaigners are concerned that the large number of “food miles” are not properly factored into the price of Australian meat. They warn that Australia’s lower standards in some areas like pesticides, antibiotic use, standards on live animal transport, and hormones mean that the UK is rewarding countries with lower food and animal welfare standards and exporting carbon.

Going forward, the UK remains unlikely to accept hormone-raised beef and chlorinated chicken – a key hindrance to a US deal if Washington ever were to become more interested in trade talks again. However, it can accept a move over 15 years to a tariff-free deal on meat even when Australian farmers can use a range of practices and use several pesticides banned in the UK.

Johnson sided with the free traders over Australia, but he had not done so last summer on similar questions around US trade. Expect similar track changes in the future, as the government must, for instance, remain mindful of the impact of trade on the union amid renewed pushes for Scottish independence. But the biggest uncertainty remains the changing composition of the Tory electorate, with urban industrial constituencies challenging the traditional focus on affluent rural (farming) communities.