Exciting times for services but UK must stand by farming commitments, IOE and IT chief says of new FTAs

Wed 31 May 2023
Posted by: William Barns-Graham
Trade News

Marco Forgione in front of Parliament

The director general of the Institute of Export & International Trade (IOE&IT), Marco Forgione, has said that UK businesses are “overwhelmingly positive” about the UK’s new free trade agreements with Australia and New Zealand, which came into force today (31 May), but warned the government needs to stick by its commitments on farming standards.

Speaking to BBC World Business News this morning, Forgione said:

“The IOE&IT has been speaking to hundreds of UK businesses over the last couple of months, to really understand their perceptions and views. It’s clear that the business community is overwhelmingly positive about the agreements with Australia and New Zealand.

“There are caveats, however, particularly around food standards. It’s important that the UK government stands by its statement that UK farm standards – both regarding animal welfare and on the environment – are not compromised.”

Services boost

He added that the deals don’t just provide benefits for goods and food exporters, but that the UK’s “world-leading services” sector could also receive a boost.

“There is huge potential for UK food exporters. We can see this in the impact of the UK’s deal in Japan where, since 2021, food and drinks exports have increased by 58%.

“If we look at Australia and New Zealand, however, it’s not just about food and products, but it’s also about services. The UK’s world-leading services sector will now have unfettered access into Australia and New Zealand, as well as access to government contracts in both countries.

“There’s a massive potential here for UK businesses to really grow and develop in these new and exciting markets.”

‘Significant concerns’

The deals with Australia and New Zealand have received criticism from some MPs and industry bodies representing the UK agricultural sector.

Labour MP and shadow international trade secretary Nick Thomas-Symonds has written to trade secretary Kemi Badenoch to express “significant concerns” about the deal, claiming that British farmers have said it will “heap further pressure” on them.

Speaking to Radio 4’s Today Programme, David Barton, the chair of the National Farmers Union, called both agreements a “bad deal”. The Guardian reports him saying:

“It is such a bad deal because they gave so much away and any other trading nation will want exactly the same deal. So, it’ll be the [cumulative] effect over time that will be the problem. It may not be Australia on its own, but it will be other nations that want that deal.”

Although Thomas-Symonds said the government “made a mess” of the trade negotiations, he called on government to support businesses to “grasp any trade opportunities in Australia and New Zealand”, the Mirror reports.

Standards matter

The government has claimed that there are “robust protections for British farmers in both deals, including staging tariff liberalisation for sensitive goods over time”. It has also said the agricultural standards in the UK will not be undermined by the agreements.

Forgione told the BBC that “the government has made clear that UK standards will not be compromised” but said that “independent analysis and review” would be needed to assess the impacts of the deal.

David Henig, the UK director of the European Centre for International Political Economy, agreed, tweeting that “full implementation reporting” would help. He added:

“Perhaps the fears of farmers about trade deals are overblown. Perhaps the UK exporters who tell me they are of little benefit will be wrong. But we can measure that. And if government commits to doing so, annually, preferably independently conducted, we can start to regain trust.”

Food and drink boost

Food and drink exports from the UK to Australia and New Zealand dipped in the first quarter of 2023, according to new data from the Food and Drink Federation (FDF).

However, the FDF’s head of international trade, Dominic Goudie, said that the trade agreements could pave the way for future growth.

“We firmly believe the removal of tariffs through the new free trade agreements will unlock exciting opportunities for UK food and drink manufacturers,” he said.

Kathy Caton, the founder and managing director of Brighton Gin – one of the first products to be sent by the UK government to trade ministers in Australia and New Zealand after the deals came into force at midnight – also praised the deal’s benefits for exporters. She said:

“In an increasingly competitive and global market, removing trade barriers is exactly the support that the British gin industry needs.

“With a Brighton in every state in Australia, one of our goals is to see Brighton Gin being served in every one. Hopefully the free trade agreement gets us one step closer to that.”

Reduced costs for UK consumers

Forgione also argued that the reduced tariffs for UK importers from the deals could also provide good news for British consumers.

“There is the real potential to reduce the cost for shoppers when they are buying products. Food inflation in the UK is running at about 15% right now.

“Anything that can be done to reduce the cost for the consumer is positive, but it must be done in a context that protects UK growers, farmers and the standards for animal welfare and the environment.”