Ministers at odds over UK plans for tariff-free Australia trade deal

Tue 18 May 2021
Posted by: William Barns-Graham
Trade News

uk australia

Government ministers are engaged in a ‘ferocious’ debate over the prospective terms of a trade deal with Australia, for which negotiations are thought to be almost complete.

The Departments for Agriculture and International Trade are at odds over whether to grant tariff-free access to Australian agricultural firms, with the former fearing backlash from the UK farming industry.

As reported in the IOE&IT Daily Update yesterday, the National Farmers’ Union (NFU) has expressed concern that its members could be undercut by cheap Australian meat imports in the event of a tariff-free deal, with British food standards falling as a result.

Eustice vs Truss

The FT reports that cabinet ministers George Eustice and Michael Gove are arguing against opening up the UK market to Australian imports.

This would put them in direct confrontation with international trade secretary Liz Truss who is leading the negotiations for the deal.

Boris Johnson has not made any statement indicating what side of the argument he’d back, but he spoke to Australian PM Scott Morrison on Friday and both welcomed the progress made towards securing a deal.

Denials

An ally of Truss told Politico’s London Playbook today (18 May) that the critics of the agreement had little to fear.

“It’s a much smaller market than the EU, more than 9,000 miles away,” he said. “An Australia deal will not damage our farming industry. The protectionist arguments simply don’t stack up in the cold light of day”. 

The Express also reports agriculture minister George Eustice speaking on Sky TV denying there was a split.

“In any discussion on any part of government policy, trade agreements are no exception, there's a discussion and there's a consensus,” he said. “At the moment there is a clear consensus in government that we want to do a trade deal with Australia but obviously on the right terms.”

Stand up for farmers

The UK Farming Roundtable, which represents 19 agricultural bodies, released a statement yesterday urging the government to “stand up for UK farmers in all negotiations”.

It also said that “the suggestion that negotiators are now in a ‘sprint’ to finalise the details of a UK-Australia free trade agreement gives rise to concerns that the UK will come under pressure to make serious and potentially damaging concessions”.

Symbolic deal

According to Bloomberg, the deal would represent relatively small value for the UK economy, only adding 0.02% to UK GDP over 15 years.

However, an agreement with Australia could carry symbolic weight as one of the first completely new trade deals for post-Brexit UK.

Most of the agreements the government has agreed so far, since leaving the EU, have been to roll over trade terms that the UK had previously had as a member of the EU.

An Australia deal could also oil the wheels for possible CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership).