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Canada is seeking to secure sweeping access to the British market for its farmers in trade talks, after UK concessions to Australia threatened to open the floodgates for food imports.
Ottawa believes it can secure an ambitious deal on agriculture in negotiations later this year and hopes to take inspiration from the generous agreement set to be sealed with Australia, The Sunday Telegraph can reveal.
It came as Whitehall sources said a trade deal with Australia would pave the way for a New Zealand agreement within weeks, with Wellington expected to be offered similar terms.
The UK is about to propose a tariff-free, quota-free deal with Australia, phased in over 15 years, after a bitter row about protecting British farmers divided the Cabinet. A source close to Canada’s trade team said Ottawa has been watching Australian talks closely and wants a better offer than its agriculture industry gets under an agreement with the European Union.
A Canadian source said: “There are areas where we think we can move further on agriculture with the UK, since we are only negotiating with one country rather than 28.
“We would learn from that [Australia] agreement… It would help inform some areas where the UK is looking to position themselves.”
After it rolled over a number of former EU deals, the UK’s tie-up with Australia will mark the country’s first significant post-Brexit trade deal.
However, British farmers have warned they could be undercut by foreign food imports as they face competition from larger and more efficient overseas rivals.
Canadian farming lobbyists are ramping up pressure on their government to secure sweeping access to Britain. Claire Citeau, head of the Canadian Agri-Food Trade Alliance, said: “Securing better, meaningful and competitive access to the UK market is a top priority for our exporters.”
Dairy, beef and wheat exporters in Canada are keen to expand sales into the UK, with many left disappointed by the deal struck with Brussels in 2016.
Most Canadian food production methods align strongly with the US, its top trading partner and include controversial practices, such as genetic modification of crops and chlorine washes of chicken carcasses. British ministers have already ruled out a substantial lowering of UK food standards.
Nick Fenwick, head of policy at the Farmers’ Union of Wales, warned a generous offer to Australia could create a domino effect leading other countries to make high demands.
He said: “We’ve set our bar so low that that’s what the other nations will be looking at when they walk into the negotiating room.”
UK-Australia negotiators are conducting “sprint” talks over Zoom as part of efforts to get a deal in place so it can be signed at the G7 Summit in Cornwall next month. Talks were put in jeopardy last week when Environment Secretary George Eustice demanded more farmer protections.
Government sources said they hope a deal can be struck with New Zealand in weeks, rather than months, if an agreement is reached with Australia. UK negotiators feared a collapse in talks would scupper the New Zealand negotiations and undermine Britain’s ambitions to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a Pacific rim trading bloc.
Australia’s former High Commissioner to the UK, Alexander Downer, said Canberra would be willing to walk away if Britain winds back its offer.
He said: “We’ll have a meaningful free trade agreement or we won’t have an agreement at all.”
Nick Allen, chief executive of the British Meat Processors Association, warned of the toll high-end meat imports from Australia and other potential trading partners could take on one of the most lucrative areas for UK farmers. He said: “You don’t need a lot of that coming in to actually have quite an impact on the market here.”
A spokesman for the Department for International Trade said: “No deal sets a blueprint for future deals, all trade deals are different and are tailored to the relationships and markets of the countries involved – there is no one size fits all.
“Any deal we sign will include protections for the agriculture industry and will not undercut UK farmers or compromise our high standards. Typically, any tariff liberalisation is staged over time.
“We will continue to work with the industry, keeping them involved throughout the process and helping it capture the full benefits of trade.”
The Canadian government was contacted for comment.
Read on for our insight into the issues and opportunities surrounding the UK-Australia trade deal.
Australian free trade deal hangs in the balance
Dreams of a post-Brexit trade renaissance for “Global Britain” were hanging on a knife edge last week, with the Cabinet locked in a fierce briefing war over the price of a free trade deal with Australia.
International Trade Secretary Liz Truss, who favours a zero tariff, zero quota approach in order to boost the flow of trade, was pitted against a faction headed by George Eustice, the Environment Secretary, who opposes the proposals and the impact they might have on British farmers.
There were signs of white smoke on Friday after the Government indicated that Boris Johnson had thrown his weight behind Truss, clearing the way for negotiators to offer the Australians a zero tariff, zero quota trade deal following a 15-year transition.
It now looks likely that a deal will get over the line, but the feud has laid bare a debate at the heart of the Government’s global ambitions: what price is the UK willing to pay to show it is serious about striking out into the world and securing new deals as an independent trading nation?
After largely rolling over former EU agreements, Australia – with its similarities in language, outlook and standards – is seen as a natural target for Britain’s first major free trade deal since leaving the bloc.
Much is at stake. Sources close to the negotiations warn that should talks with Australia fall, those with New Zealand could also collapse. “If it ends up that we can’t do an Australia deal then that is a serious, serious blow,” says a Whitehall source close to the talks.
“This was always going to boil down to agriculture, but it’s not helpful that this is playing out in public … it basically just gives the Aussies a bit more leverage.”
Canada looks on with interest
A Department for International Trade source adds it would have “practical knock on consequences” for joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a bloc of fast-growing nations on the Pacific rim.
Canadian officials are also understood to be watching closely and believe the Australia talks could shape their own negotiations later this year.
George Brandis, Australia’s high commissioner to the UK, warned it would send a “catastrophic signal” for Britain if no agreement is reached.
“Australia should be the easiest deal out there, we have interoperable standards and very similar professional credentials,” says Lord Hannan, a government adviser to the Board of Trade. “It is absolutely incredible there should have been this resistance to it.”
For more than a month, UK negotiators have been locked in so-called “sprint” negotiations – mainly conducted via Zoom – to finalise a deal with their Australian counterparts.
Truss hopes to tie up the deal in time for the G7 summit in early June, when Australian prime minister Scott Morrison is set to visit. But allies of the Trade Secretary have tried to walk back that deadline, saying she would be “relaxed” if it takes longer. Dmitry Grozoubinski, a former Australia trade negotiator, says floating the G7 as an end point created “artificial pressure” on the UK to offer concessions.
Talks risked turning sour last month, after allies of Truss told The Telegraph she was willing to put her counterpart, Dan Tehan, in an “uncomfortable chair” in the Foreign Office forcing him to “deal with her directly for nine hours”. Australian negotiators are currently holding firm on demands for full tariff liberalisation.
Deal could see an 83pc jump in imports
At present, Australia represents just a small fraction of UK meat imports. Just 0.5pc of Australian beef and 1.6pc of sheep meat exports went to Britain in 2019, with the figures similarly small as a proportion of total British meat imports.
But there are fears within the farming industry and Department for Environment, Food and Rural Affairs that Australian producers, which are typically bigger and more efficient, will ply the UK with cheap meat and leave British farmers unable to compete.
National Farmers Union (NFU) president Minette Batters warns there is a “trade-off” that needs to be “balanced” between securing new markets abroad and opening up to imports. She says there was a risk UK farming could suffer “irreversible damage” if an Australia pact undercuts the country’s animal welfare standards.
Brandis insists Australian producers won’t flood the UK market, saying they are already focused on closer markets in Asia and would only send higher-end cuts to the UK.
But the Government’s own modelling makes less comfortable reading for British farmers. A scenario for a deeper trade deal expects an 83pc jump in imports from Australia. The overall boost to UK GDP, meanwhile, is estimated at just 0.01pc or 0.02pc. Northern Ireland, with its large farming sector, would be left up to 0.25pc worse off.
Eustice and his predecessor Michael Gove are calling for the introduction of a tariff rate quota system for Australian produce, in which a limited quantity of a product can be imported before a higher tariff rate kicks in. Canberra has usually had to accept such concessions while striking trade deals, and recently went through four gruelling years of quota negotiations with the EU.
Grozoubinski says Canberra – which has usually had to fight tooth and nail for tariff-rate quota access to foreign markets – will be delighted that a zero-quota deal could be offered.
“If I was the Australian trade minister right now, and the UK was offering tariff-free quota-free access to the UK agricultural market, bound in [a free trade agreement], forever, then forget the uncomfortable chair – I would let Liz Truss seat me in an iron maiden,” he says.
The NFU’s Batters warns the deal will set a precedent for other trade agreements on agriculture. “All we are asking is that on sensitive areas they put a tariff-rate quota in place and mainly the option to review. If there is no threat, they shouldn’t begrudge the option to review sensitive sectors.”
Negotiations with New Zealand step up
A Downing Street spokesman on Friday said that “negotiations are still ongoing” and insisted farmers would be protected in any deal with Australia.
Indeed trade negotiators are watching the Australian talks closely to discover Britain’s red lines. A source close to the Canadian trade team says the talks will “help inform” their own position when negotiating with the UK. They say Canada is looking to make inroads in agriculture in a UK agreement after a limited EU deal.
“There are areas where we think we can move further on agriculture with the UK, since we are only negotiating with one country rather than 28,” they add.
Meanwhile, London and Wellington are stepping up trade talks. New Zealand’s agricultural sector is worth around 6pc of its GDP and it is one of the biggest lamb and wool exporters globally. Farming is a far larger slice of the country’s economy than in the UK – where it is worth just 0.5pc.
“In New Zealand we only do a few things well: rugby and agriculture,” says Andrew Hoggard, president of Federated Farmers, the country’s farming industry group. “Agriculture is our big industry really, so for any trade deal to be meaningful for New Zealand and to warrant time and effort we do need to see some movement on [that] side of it.”
New Zealand could offer post-Brexit Britain some lessons after its own trade liberalisation in the 1980s transformed it from a heavily protected market into one of the world’s most open.
“It was scary at the time, our government probably went a little too fast and it caused a bit of pain,” says Hoggard. “But you won’t find a New Zealand farmer that wants to go back to how things were.”