The UK-Australia Free Trade Agreement (FTA) has to be ratified this year. Though we understand that getting MPs to vote down the deal is unlikely, this deal mustn't be a model for future FTAs.
NFU Director of Trade and Business Strategy Nick von Westenholz, was asked about the principal concerns surrounding the FTA with Australia.
He explained that the NFU has serious concerns about the agreement.
It is a highly liberalising deal with a country that is an extremely effective net exporter of agri-food, with a huge capacity for domestic production and a comparatively small population for production to service.
Deal favours Australia
Ultimately the deal is highly likely to favour Australia over the UK.
Specifically, lower production costs and weaker standards will see the introduction of more competitive Australian imports that will become completely tariff-free after 15 years. Asking UK farmers to go toe-to-toe whilst maintaining their sustainability, environmental, and animal welfare commitments significantly risks the longevity of the UK agricultural sector in the future.听听
厂补蹿别驳耻补谤诲蝉听听
The Committees requested evidence on how safeguards can mitigate the negative impact on the agricultural sector.
鈥淲hen we eliminate tariffs, as this deal does overtime, that then takes away much of the potential cost barrier for Australian farmers to out compete producers in the UK.鈥�
Nick von Westenholz, NFU Director of Trade and Business Strategy听
Nick explains how the UK has failed to secure the necessary safeguards to protect the industry in the event of the worst-case scenario.
He set out the three safeguarding measures that are in place within the UK-Australia FTA.
Tariff Rate Quotas (TRQs)
The initial Tariff Rate Quotas (TRQs) are introduced and expanded over 15 years, slowly increasing the amount of product Australia can export to the UK.
Although there is method within this mechanism, the first year TRQ for beef is offered at 35,000 tonnes which is already 10% of UK import requirement.
Nick added that for the fifth stage of TRQs (Year 15) for sheep meat, Australia could export 155,000 tonnes, equivalent to 150% of the UK鈥檚 total import requirement, almost half of total production, and emphasises the limitations of the TRQs effectiveness.听听
Nick then outlined a secondary safeguard measure that operates similar to quotas.
Product-specific safeguards
He explained that between years 11 and 15, product-specific safeguards are brought in if harm is being shown to the red meat sectors as a direct result of the deal.听
World Trade Organisation
Nick emphasised that there are no quotas or technical safeguards following the 15-year period, and if needed, the only safeguards left in place will be those within World Trade Organisation (WTO) safeguards that, if implemented, will be applied across the board impacting trade with all countries.
As a result, these safeguards will be a last resort.听听
Nick argued that the best-case scenario for UK farmers to adapt would be for volumes to increase moderately and modestly. Australian exports could then continue to service markets in the Far East. However, as he pointed out, Australia may quickly change focus to an attractive UK market with geo-political issues ongoing.听
He adds that there is no explanation within the agreement to state how TRQs are to be managed, whether annually or quarterly. In particular, sheep meat TRQs are not seasonal, which risks potential surges for UK farmers.听听
Standards听
Members of the Committees were keen to hear evidence on the issue and difference between UK and Australian standards and whether this impacted cost of production. The unanimous opinion was that UK farmers are required to produce food to higher environmental, climate-friendly and animal welfare standards than demanded in Australia.
Nick noted that the regulations to ensure our high standards do impact production costs and flagged that the broader environment, requirement for planning permission for extra premises and machinery, and limited space makes investment expensive and prevents UK farmers from achieving the economies of scale needed to compete.
In comparison, Australia has infinite space and the ideal climate to farm at scale.听
When questioned why agreements for the trade of poultry had not been achieved, Nick stated it was as a result of differences in standards. However, he was concerned at why this reason had not been applied to other sectors.
Nick explained that he was in favour of the principle of defining core standards, especially where these are transferable between countries. He noted it was important to introduce a process where critical and important standards are outlined, and the same expectations for UK production is applied to imports.
鈥淚t seems to me, quite extraordinary, that both the UK and Australian governments have made the claim that they're not going to meet these sorts of [TRQ] volumes, in which case I think you ask the question, 'well why did you agree it in the deal?鈥�
Nick von Westenholz, NFU Director of Trade and Business Strategy听
Nick concluded that this process should be set up and implemented within the negotiation of future FTAs.听听
Industry engagement听听
Both members of the International Agreements Committee and EFRA Committee queried the engagement of industry within the negotiation of the UK-Australia FTA.
Nick explained how contact with government departments is regular, and we have been clear with the concerns of the NFU and our members.
Nick also referred to the International Trade team鈥檚 involvement in the agri-food trade advisory group (TAG), which initially appeared to be a forum to advise government during agreement talks; though it materialised into a group that received updates on the progress of negotiations under an NDA.
Box ticking
Arguably this was seen as ticking the box of industry engagement.
Nick explained to the Committees that it was regularly too late for any comments or advice to be taken on board and implemented as 鈥榰pdates鈥� from government officials had already been agreed with their Australian counterparts.
Nick, along with others giving evidence, stressed that future involvement in FTA negotiation was extremely important to not repeat mistakes made within the Australia agreement.听