Australian trade deal: 8 things you need to know – ENDS Report

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1 The government is set to offer Australia a free trade deal

According to a series of media reports, the prime minister has given trade secretary Liz Truss his blessing to pursue a free trade deal with Australia, offering a 15-year transition to the end of tariffs and quotas. It could be agreed in principle when Australian prime minister Scott Morrison attends the G7 summit in Cornwall next month.

The Sun said the deal would deliver a “burger and wine bonanza”, though a government report has suggested that it would increase the size of the economy by only 0.01% to 0.02% over 15 years.

It appears that warnings from George Eustice – who comes from a farming background – have been disregarded. Heeding concerns from agriculture and backed by his predecessor Michael Gove, he advised that quotas for meat imports should be agreed in the deal to protect UK farmers but was apparently left isolated in the Cabinet. But a commitment to maintain UK farming standards has reportedly remained.

2 Australian beef is raised using growth hormone

According to government agency Food Standards Australia New Zealand, ‘hormone growth promotants’ are used on about 40% of Australian cattle. They have been used for more than 30 years and contribute AUS$210m (£115) to the economy annually, by reducing feed intake and cutting costs.

The EU, and by inheritance the UK, bans the use of such hormones and the importation of beef produced using them. However, the ban was found to be inconsistent with World Trade Organization rules in 1998.

3 Food and animal welfare standards are lower in general

Australian standards tend to be lower than that of the UK. Mulesing – slicing off strips of skin from live sheep – is permitted. A report last autumn from the Alliance to Save our Antibiotics found that Australian farmers use 16 times the amount per animal in poultry and three times in pigs than in the UK. Such behaviour has been questioned as it can lead to bacteria becoming resistant to antibiotics.

Australian grapes are allowed to contain 1,000 times the amount of the insecticide propargite that the UK permits, a substance linked to infertility, cancer and miscarriages. Similarly, Australian wheat can contain ten times the amount of carbaryl allowed here, despite being suspected of being an endocrine disruptor and a reprotoxin.

The insecticide dimethoate was banned in the UK and EU last year, though continues to be used in Australia.

“While many British consumers might look forward to cheaper Australian goods too, we owe it to them to ensure any food we import under this – or any other – trade deal meets the same high standards as is expected of UK producers. Herein lies the risk. If the government does not back British farmers in these negotiations, then producers run the risk of being undercut by cheaper imports produced to much lower standards. This would be unacceptable,” said Mark Bridgeman, president of the Country Land and Business Association.

4 Farmers are worried

The National Farmers Union is concerned that its members could be forced out of business by being outcompeted by cheap food produced to lower standards. It has outlined five key questions on the government’s trade policy and a future free trade agreement (FTA) with Australia.

What specific meaningful safeguards for domestic agriculture will be included in our FTAs?

  • What is the government’s plan to continually review the impact of our FTAs as they are implemented and through the lifetime of the agreements?

  • Where is the comprehensive and cross-government strategy to improve productivity and competitiveness and to provide adjustment assistance for farming in respect to the changing market conditions resulting from new FTAs?

  • Where is the government’s response to the Trade and Agriculture Commission’s report in March 2021 and why has the new statutory Trade and Agriculture Commission that will need to scrutinise trade deals before they are signed not yet been set up?

  • What precedent does the government expect will be set by each FTA and where is the detailed economic assessment of the cumulative impact on domestic UK agriculture of all the UK’s current and future FTAs?

NFU president Minette Batters said the government’s plan to sign a trade deal with no tariffs or quotas on sensitive products is “wholly irresponsible”.

“There remains a huge amount of unanswered questions about exactly how decisions regarding trade policy have been made, on what basis and how it will operate in the future. It’s crucial urgent answers are provided to these questions.

“The prime minister and his government have pledged to level up the country. Agreeing to a tariff-free trade deal with a major agricultural exporter, with no safeguards or review mechanisms, would do exactly the opposite of that commitment and set swathes of rural Britain backwards,” she added.

5 Australia is a climate laggard

Despite wildfire outbreaks in recent years, Australia remains a key backer of coal power, being a major source of coal for China (until deteriorating relations led to a de facto ban in October). Coal, oil and gas also account for the vast majority of its own energy consumption, contributing 79% of its electricity generation in 2019. The UK’s figure was just 43%.

Prime minister Scott Morrison is also one of the few world leaders not to have set a date for reaching net zero emissions, setting up a diplomatic clash with the UK ahead of COP26.

The differing positions mean that it will be difficult to agree meaningful climate terms in the trade deal.

6 The UK is advised by a former Australian prime minister

Former Australian prime minister Tony Abbott became a member of the government’s Board of Trade in September, advising on trade policy. He was therefore required to register as an ‘agent of foreign influence’.

Writing in yesterday’s Times, he said that “petty provincialism” should not get in the way of a deal: “Britain currently produces under 60 per cent of what it eats so needs access to healthy and affordable food from elsewhere. Where better to obtain the clean, quality food that Britain needs than Australia: the country you’ve always been able to depend on, in war and in peace?” he said.

“Our attitudes on food safety, animal welfare and environmental protection are essentially the same as yours”, Abbott added – a claim that met with a simple “Oh dear” from Shaun Spiers, executive director of the Green Alliance.

In 2014, Abbott scrapped an incoming carbon tax before it entered force, saying that it would cost Australian households about £300 a year.

7 The deal would come with a carbon bill attached

Being on the other side of the world, transporting goods to and from Australia, whether by plane or ship necessarily produces hefty carbon emissions. But the issue has not been given the attention it deserves, according to former MP Alan Simpson.

“Why is no one asking about the carbon footprint of such a deal? Shipping produce half-way round the world leaves a massive carbon footprint. Localised markets can cut food-miles by 90%, meet CO2 reduction targets and strengthen food security,” he tweeted.

8 It could be a trial run for broader trade deals

The environmental threats from a US trade deal are well established and similar to those from an Australian deal, though could be more acute, considering the shorter distance over the Atlantic and the size and lobby power of US industry bodies.

Last week, a letter to the Times said that “tariff-free access to low-standard, low-welfare Australian produce” would pave the way for similar deals with larger nations.

“This food could end up in schools, hospitals and care homes. Such a deal would also impose low-standard produce on Scotland and Wales, as the Internal Market Act insists on free trade between the nations. The government would be breaking its manifesto commitment to maintain our standards. This deal would undermine our farmers and export the UK’s ecological and carbon footprints as it prepares to host Cop26. We urge Boris Johnson to rethink”, wrote Vicki Hird, head of sustainable farming at Sustain, Chris Sherwood, the chief executive of the RSPCA, Friends of the Earth trade lead Kierra Box and several other figures.

Truss also sees a deal with Australia as laying the groundwork for the UK’s entry into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade pact that Canada, New Zealand, Japan, Mexico and others have signed.

“We’re seeing 66% of the world’s middle classes are going to be in Asia by 2030, growing demand for products like beef and lamb. So both Australian access and CPTTP access I think is positive for British farming,” Truss told MPs last week.