Australia trade deal: Five questions the UK government must answer

NFU President Minette Batters 2020 Portrait_74660The NFU has outlined five key questions the UK government needs to urgently answer regarding its future trade policy and the ongoing negotiations on a free trade agreement (FTA) with Australia.

This follows reports suggesting the UK government is set to offer Australia a trade deal that includes a 15-year transition to zero-tariffs and zero-quotas.

Those questions are:

  • What specific meaningful safeguards for domestic agriculture will be included in our free trade agreements (FTAs)?
  • What is the government’s plan to continually review the impact of our FTAs as they are implemented and through the lifetime of the agreements?
  • Where is the comprehensive and cross-government strategy to improve productivity and competitiveness and to provide adjustment assistance for farming in respect to the changing market conditions resulting from new FTAs?
  • Where is the government’s response to the Trade and Agriculture Commission’s report in March 2021 and why has the new statutory Trade and Agriculture Commission that will need to scrutinise trade deals before they are signed not yet been set up?
  • What precedent does the government expect will be set by each FTA and where is the detailed economic assessment of the cumulative impact on domestic UK agriculture of all the UK’s current and future FTAs?

NFU President Minette Batters said:

“It is incredibly disappointing to hear news of the government’s trade strategy from sources other than the government themselves, especially when its reported plans will have such a massive impact on British farming.

“There remains a huge amount of unanswered questions about exactly how decisions regarding trade policy have been made, on what basis and how it will operate in the future. It’s crucial urgent answers are provided to these questions.

“It is also incredibly concerning that the government is in a ‘sprint’ to sign up to a trade deal with Australia that would have serious implications for British farming and would seemingly offer incredibly little benefit to the economy.

“We continue to maintain that a tariff-free trade deal with Australia will jeopardise our own farming industry and could cause the demise of many, many beef and sheep farms throughout the UK.  This is true whether tariffs are dropped immediately or in 15 years’ time. 

“The Prime Minister and his government have pledged to level up the country. Agreeing to a tariff-free trade deal with a major agricultural exporter, with no safeguards or review mechanisms, would do exactly the opposite of that commitment and set swathes of rural Britain backwards.

“It is vital that we have a thriving food production industry. We all saw the importance of this during the height of the pandemic; when government itself described farmers as key workers playing a vital role in delivering the nation’s food.

“We remain of the view that it is wholly irresponsible for government to sign a trade deal with no tariffs or quotas on sensitive products and which therefore undermines our own domestic economy and food production industry.”

The detail behind these questions

1. What specific meaningful safeguards for domestic agriculture will be included in our free trade agreements (FTAs)?

If there are negative impacts, contrary to government assurances, what safeguards will be included in the agreement and in what circumstances will they be triggered. Will these safeguards be permanent, so that they continue to operate after the completion of any 'phasing in' period of tariff liberalisation?

2. What is the government’s plan to continually review the impact of our FTAs as they are implemented and through the lifetime of the agreements?

There are conflicting projections as to the potential impact of our new FTAs on different sectors on UK agriculture. The government has repeatedly given assurances that these impacts will be limited and manageable, but it is clear that large scale tariff liberalisation, even over a period of years, has the potential to impose severe downward pressure on farm gate prices to levels that make farming unviable for many. Given this risk, how does the government propose to monitor the impact of our FTAs on an ongoing basis, both in terms of the economic impact on farmers, and the effect on our high standards of production and the standards of production of the food we import and available on the UK market.

3. Where is the comprehensive and cross-government strategy to improve productivity and competitiveness and to provide adjustment assistance for farming in respect to the changing market conditions resulting from new FTAs?

The government has said it believes that UK farming will increase its productivity year on year to coincide with the implementation of FTAs, so that UK farmers can keep up with increasing competition in the UK market. The government has also spoken of the benefits of these FTAs in opening up new markets for UK farmers and growers. This will need an explicit, single, cross-government, properly costed and well-funded strategy, including:

  • Properly funded domestic schemes to assist farmers in investing in more productive and efficient technology, consistent with government aims around sustainability and climate friendly farming
  • A full assessment of the regulatory burdens holding back on-farm productivity and a review of all new farming regulations being brought in to ensure they are accompanied by other measures that ensure a net-gain in productivity
  • A comprehensive export strategy, including proposals for government/industry partnership and match-funding for export promotion and market development. It must also include investment in a significant increase in trade diplomacy overseas, including boots on the ground in our embassies focusing on agri-food exports.
  • A fully funded Adjustment Assistance Programme to help those businesses adversely impacted by an FTA to adjust and adapt.
4. Where is the government’s response to the Trade and Agriculture Commission’s report in March 2021 and why has the new statutory Trade and Agriculture Commission that will need to scrutinise trade deals before they are signed not yet been set up?

The TAC report set out important recommendations on ensuring standards are upheld in trade deals, and in balancing the benefits of liberalisation with the future viability of domestic agricultural sectors. In particular, the TAC report spoke of the need for government to set out a list of core standards that would be safeguarded in our trade deals. As we approach the finishing line of the first of those deals, why have we not yet seen the government’s response, and how does the government intend to incorporate those recommendations into that deal? More broadly, what approaches has and will the UK government insist on in our FTAs to uphold our environmental, animal welfare and food safety standards. The new TAC is needed as a matter of priority to give it sufficient time to prepare for proper scrutiny of all trade deals as they are concluded.

5. What precedent does the government expect will be set by each FTA and where is the detailed economic assessment of the cumulative impact on domestic UK agriculture of all the UK’s current and future FTAs?

The government has stated that our first FTA will not set a precedent for future FTAs. The government should spell out precisely what this means, and how it expects future FTAs to differ from the first FTA it concludes. There will of course be some differences, but the key issue is whether large-scale liberalisation will be replicated in each or any of our future FTAs. It is clear that the cumulative impact of such liberalisation would have an enormous impact on UK domestic producers, and the impact needs to be modelled ahead of FTAs being finalised. 

Further reading