High stakes for Australian meat and post-Brexit Britain as cabinet debate over trade deal escalates

Thu 20 May 2021
Posted by: William Barns-Graham
Trade News

Cabinet ministers met today (20 May) to resolve divisions over the UK’s negotiations for a trade deal with Australia.

The national media reported that Prime Minister Boris Johnson was hoping to use today’s meeting to broker a truce within his government as he bids to secure what would be a landmark post-Brexit free trade agreement.

Protection for farms

The proposed tariff-free deal has been contested by environment secretary George Eustice and cabinet officer Michael Gove, who are demanding robust protections for British agriculture.

Their opposition follows an article from National Farmers’ Union president Minette Batters in the Mail on Sunday about fears that British farmers could be undercut by much larger Australian rivals who can produce meats at lower standards and price.

Trade secretary Liz Truss argues that a deal would open new markets for British exports of whisky, cars and services, and she is also trying to negotiate better opportunities for UK citizens to work in Australia.

Precedent

Speaking on Radio 4’s Today programme this morning, David Henig, founder of the UK Trade Forum, said an Australia agreement would become the model for other negotiations with major agricultural exporters and would therefore set an important precedent.

“Whatever Australia gets, New Zealand and the US will want too,” he said.

“We do look desperate. Setting our deadline for the G7 summit doesn’t look like the smartest of moves because it gives the Australians the opportunity to dig in,” he added.

‘Catch up’

Sheep meat trade is a priority for Australia, particularly as it is looking to “catch up” with New Zealand trade into Britain, Henig said.

According to the British Meat Processors Association, New Zealand is responsible for more than 70% of sheep meat imports to the UK, while Australia has only a 15% share.

Quotas

A cause for this disparity is the import quotas that the UK has set for each country.

Once a country’s quota of exports into a country is used up for a specified commodity, any further exports of that good will receive a tariff.

According to Meat and Livestock Australia, the quota for sheep and goat meat into the UK is 13,335 tonnes, after which a 12% tariff is payable.

This compares unfavourably to New Zealand’s quota of 114,205 tonnes, according to the New Zealand Meat Board.

“That’s why it’s a tough deal and maybe Australia wouldn’t even want a deal if we protected the market to the same extent. We’re playing for quite high stakes,” Henig said.

Scotland

Alongside Eustice, Michael Gove is arguing for stronger protections for farmers and is reportedly arguing that a tariff-free deal could harm agricultural industries in Scotland and Wales, adding fuel to ongoing debates in each nation over their future in the United Kingdom.

NFU Scotland has contacted Scottish politicians to seek their support in ensuring that any trade deal receives proper scrutiny.

Union president Martin Kennedy said he was concerned that Scotland’s beef, dairy, sheep and grain sectors were particularly exposed in the event of a rushed deal.

Wales

According to Nation Cymru, first minister of Wales Mark Drakeford met with minister Michael Gove to discuss the concerns of Welsh businesses. 

“Mr Gove did undertake faithfully to relay the strong concerns that were put to him about our communities in Wales, Scotland and Northern Ireland,” he said.

‘Food exports are second to none’

Responding to questions about the debate in parliament today (20 May), Boris Johnson said the UK had become “successful and prosperous” on the back of exporting products around the world, adding, “our food exports are second to none”.

The deal will “include protections for the agriculture industry and won’t undercut UK farmers or compromise our high standards”, a Downing Street source told the FT.